Disenfranchised? What’s new? This time is different.
We often hear about a company becoming disenchanted with one of the large franchises and subsequently taking their leave. This is not all that unheard of but there appears to be a growing trend of large companies being disgruntled with the position, or their lack of a position, within the large, multi-brand, multi-national Realogy Group.
At the end of 2007 the #1 ERA franchise in the country left Realogy after more than three decades as an ERA franchisee. Their choice was not another franchise, although they were heavily pursued at the time, it was independence. What makes their departure significant is that at the time it was the #1 ERA franchise in the U.S. Many companies would give their proverbial “left-arm” to be part of the Realogy Group, so why would a company that had been part of the group so long want to leave?
Adding fuel to the trend is the announcement last week that the #1 Coldwell Banker franchisee in the state of Pennsylvania, Homesale, is leaving Realogy after 25 years to join arch nemesis Prudential Real Estate Affiliates.
So the obvious question is, “Has Realogy become too big with too many competing brands in one stable?” Currently Realogy owns five large national real estate brands including Coldwell Banker, ERA, Century 21, Sotheby’s Real Estate and Better Homes as well as a variety of regional brands such as The Corcoran Group in New York City, the Hamptons, and Palm Beach, and The Sunshine Group in New York City and in Palm Beach.
"Realogy seems to want to add more franchising brands to their stable," says Doug Rebert, a managing director with HomeSale. For example HomeSale, that was operating under the Coldwell Banker brand (owned by Realogy), had an annual sales volume of $2.09 billion in 2007 while their largest competitor, Jack Gaughen Realtor ERA, a 15 office company with over 500 agents owned and operated by National Realty Trust (NRT), had a 2007 sales volume of $1.17 billion.
NRT is Realogy’s company owned operations and collectively operates some 900 company-owned real estate offices under various Realogy brands, including Coldwell Banker, ERA, etc.. With approximately 8,000 employees and 59,000 sales agents NRT is the largest residential real estate brokerage company in the United States according to both the Power Broker survey published by RIS Media and the Top 500 published by Real Trends.
Increasingly Realogy franchisees are competing with Realogy managed and owned company stores and this does not bode well with everyone.
Franchising has become a very powerful method of expanding nationally and one wonders whether this has reached a saturation point in the market. According to the National Association of Realtors®, 55% of all sales agents are currently affiliated with a franchise. At the same time approximately 80% of the largest companies and brands in the country are franchises with an estimated 25% of those agents affiliated with just with one group, Realogy. This shows just how competitive the race for market share has become. Realistically, it is going to become even more competitive over the next five years. |
