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Mar, 01 2008

Real estate brokerage franchising

In the real estate industry franchising is prevalent, particularly in hotel and residential brokerage sectors in the western counties. There are over one million realtors world-wide of which approximately one third work for franchised residential brokerag

A franchise firm in real estate brokerage offers a well-known brand name that signals information about the quality of the firm to new and existing clientele, proven systems, marketing methodology with additional benefits like financial and accounting systems; ongoing training and support; research and development; sales and marketing assistance; planning and forecasting; inventory management; national, regional and international promotional campaigns etc.

Real estate brokering is highly unorganised and fragmented in India. This sector is treated as ‘side’ or secondary option in the country and property transactions through them become necessarily restricted to local areas and lack professionalism and transparency. Consequently, the entry of branded real estate brokers would provide a variety of services from a single source which would be a welcome change for customers. With the advent of huge commercial and residential infrastructure across all cities of India, the real estate market is growing at 20-25 per cent per annum and there is huge potential.

Several real estate brokering companies from overseas are entering the property markets in India with the objective to streamline and promote the profession of real estate brokerage to achieve transparency, accountability, good governance, fair dealing and ethical practices. What the franchise firms may offer is more market appeal to customers because they have the advantage of name recognition which reduces uncertainty for customers. Franchise firms have higher revenues that allow franchisees to recover their fixed franchise fees and royalties. An important implication for the potential franchisee is to consider the cost benefits of a franchise. Although the global net profit advantage for a franchise does not appear to exist, individual firms might find a franchise particularly valuable depending on the current local competition, the level of knowledge and expertise of the owners, and the characteristics of the customer base in a particular locality.

While western real estate franchise companies are keenly exploring the real estate markets of BRIC countries, India is the most preferred destination for franchised real estate business because of exploding housing sector, huge English speaking population and high disposable income. Real estate industry is one of the biggest in the country but is completely unorganised with very few national and international players.

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