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The future of the real estate franchise

Every two years, the REALTOR Magazine reaches out the major real estate franchises that operate in the U.S. and asks them to complete a questionnaire. It then studies and combines this information into a biennial report. Many of the surveyed companies believe that the franchise market is on the cusp of great change. Several of the larger companies believe that their shrinking operations are a sign of future developments. This post will summarize some of those findings and their predictions for the future of the real estate franchise market.

The survey found that nine franchise, or 28 percent, lost U.S. offices or maintained the same amount. But this bucks the general trend of international expansion. The report noted that international expansion of real estate franchises continued, even if it was 250 offices below last years’ expansion. Several of these CEOs believe that the shrinking of U.S. franchise operations is a sign of bigger systemic changes.

Data collected from the National Association of Realtors support this position. NAR members associated with franchises dropped from 40 percent in 2013 to 38 percent in 2014. This could be evidence of a larger fracturing of the real estate franchise market, which opens up possibilities for newer real estate agent and franchise companies to break into the market.

The survey noted that the overall trends appear to point to larger firms focusing on global expansion and moving past the U.S. market. The competition is becoming fierce among franchises that compete by slashing brokerage fees and larger commissions. The survey notes that this could be a race to the bottom and encourages franchisors to find other ways of finding new members. This survey seems to suggest an opportunity for innovative, nimble companies to take advantage of the market shifts.

If you are considering expanding your franchise operations then you may want an attorney. An attorney doubles as a legal and risk advisor. They can help you identify trends in the market and ways to adapt to that change.

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