Franchises vs. Independents

Quick Takeaways

Franchises often come with brand recognition, already in place policies and procedures, and proven success
Independent firms often come with more room for personalization, freedom, and lack of what some feel can be arbitrary rules
There is no perfect answer, choosing between a franchise and an independent firm takes research and a serious look at your goals

Source: Ask Sean: Should I Buy a Franchise or Start my own Brokerage? (The Close, Dec.. 14, 2020)

Real estate franchising allows REALTORS® to start their own business but benefit from the already existing brand awareness of a larger company. Franchising, which occurs in almost every sphere of business, is perhaps most well-known in the restaurant and fast-food industry. Traditional franchises usually are comprised of a broker/owner and an office of agents, but the real-estate world also has home inspection franchises, property management franchises, and even estate sale franchises.

Independent real estate brokerages often allow agents more freedom. They also have the benefit of being perceived as more “local” than large franchises, which is often appealing to buyers and sellers who feel that agents may know more about neighborhoods and local happenings.

There are many things that factor into your decision to go with a franchise or independent. From up-front fees to brand recognition, flexibility to trail-blazing, your priorities will determine the type of real estate brokerage you choose to be part of - there is no wrong answer!

See References for more information.

References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Firm Affiliation of REALTORS®

53% of REALTORS® are affiliated with an independent, non-franchised company.
While brokers and broker associates (58%) are most often affiliated with an independent, non-franchised company, sales agents are split more evenly with 50% belonging to an independent company, 43% belonging to a franchised company, and 7% reported as “other.”
Less REALTORS® reported an affiliation with a franchised company (40%) than with an independent company (53%).

Source: National Association of REALTORS® 2024 Member Profile

Franchises: The Basics

16 Real Estate Franchises to Start (Small Business Trends, Nov. 10, 2023)

“A real estate franchise is a business that provides services related to the buying, selling, or renting of real estate. These businesses can be involved in a variety of activities, such as property management, home inspection, and mortgage financing.”

2023 Residential Franchise Report (National Association of REALTORS®, Oct. 18, 2023)

“Every two years, REALTOR® Magazine offers a scan of the residential franchise landscape. Among the franchises that provided data for the magazine’s 2023 Residential Franchise Report, nine showed an increase in number of offices, eight saw a drop, and three held steady. Among those showing office growth since the magazine’s 2021 report…Meanwhile, most of the largest franchises have been shedding offices and agents. “If you look at what I consider the four big, pure franchise companies—Anywhere, RE/MAX, Keller Williams, and Berkshire Hathaway— nearly all those incumbent franchises are losing agents net,” says Steve Murray, senior advisor to HW Media and partner at Real Trends Consulting in Castle Pines, Colo. Those shifts aren’t necessarily contractions, he says. They’re due, in part, to the shuttering of brick-and-mortar offices that’s been underway for years. The movement in agent counts, Murray says, reflects the fact that agents are also searching for their perfect fit. “Agents have more options than they’ve ever had before. On a national level, we have a whole shift going on.””

Join a Franchise Without Losing Your Independence (REALTOR® Magazine, Jun. 30, 2023)

Brokers and salespeople who consider leaving the world of independent brokerages for the security and brand recognition of a franchise face a common fear: loss of flexibility in business decision-making. Certainly, running a national or global brand while allowing franchisees autonomy can be a tricky balance. But smart franchises are proactively addressing that concern in their outreach.” Three strategies, “Niches Foster Individuality; A Need for Targeted Personalization; and Disruption from Teams,” are discussed.

Enterprise 20 – Sales Volume (T360 Real Estate Almanac, 2023)

A list of the US’s 20 largest real estate enterprises by full-year 2022 sales volume. “The ranking considers the production of both a company’s owned and franchised offices. In some cases, production includes a nominal amount of commercial activity, which does not appreciably affect volumes or any rankings.”

Busy CRE Professionals See Real Benefits of a Big Brand (Inman, Nov. 28, 2022)

“A brand with market presence and built-in awareness among developers, investors and consumers can give commercial brokers a valuable competitive edge. For instance, Doug Jennings, Co-Owner of RE/MAX Commercial Alliance in Colorado, has decades of industry experience working with large-scale commercial developments. But at his former brokerage — an unaffiliated independent firm — Jennings says he wasted a lot of time having to prove his credibility to potential clients.”

A Consumer’s Guide to Buying a Franchise (Federal Trade Commission, Sep. 2020)

“The Federal Trade Commission, the nation’s consumer protection agency, has prepared this Guide to help you decide if a franchise is right for you. It suggests ways to shop for a franchise opportunity and highlights key questions you need to ask before you invest. The Guide also explains how to use the disclosure document that franchisors must give you — under the FTC’s Franchise Rule — so you can investigate and evaluate a franchise opportunity.”

Independents: The Basics

The Biggest Challenges Indie Brokerages are Facing Right Now (Inman, Nov. 2, 2022)

“Individual agents, along with the industry at large, are experiencing an array of changes and challenges. From hurdles in the broader economy to local market adjustments to communicating new market realities with buyers and sellers, there’s plenty to keep real estate professionals on their toes.”

Big Dreams, Small Brokerages: Five Traits of Independent Firms Real Estate Agents Should Consider (Forbes, Feb. 17, 2021)

“At some point, every agent must make a tough decision: to work for an independent firm or a larger, franchised brokerage. According to the National Association of Realtors, as of 2020, the number of agents working for independent versus franchised brokerages was nearly evenly split. Of course, this doesn’t mean that all brokerages work for agents in the same way.”

The ABCs of Opening Your Own Brokerage (REALTOR® Magazine, Jun. 26, 2019)

“Ramonica Caldwell, broker-owner of Ramonica Caldwell Real Estate Group LLC in Houston, opened her brokerage mainly for the freedom. She, too, decided to go independent to control her own brand and business identity. Today, she operates with two agents. “I always knew I wanted to have my own company no matter what job I was going to do. I always wanted to be an entrepreneur. I’m normally a go-getter in everything I do,” she says. In May 2017, she opened her doors after working the previous five years as an agent with different types of real estate brokerages.”

Franchise or Independent: How to Choose?

How to Choose a Real Estate Company to Work for (Fit Small Business, Aug. 25, 2023)

Choosing a real estate brokerage to join is personal, but there are some major differences between firms that can make your decision easier. First, figure out what type of firm first your life style and professional skills: a national franchise, a boutique brokerage, or a virtual brokerage. Next, decide between working solo or joining a team within the office. Finally, compare commission splits, fees and contracts.

Why the “Teamerage” is the Fastest-Growing Model in Real Estate Brokerage (HousingWire, Jul. 24, 2023)

“Some in the industry, like RealTrends Consulting co-founder Steve Murray, believe a team can only be a teamerage if it is a standalone real estate brokerage, either independent or part of a national franchise network, that operates like a real estate team. “I don’t really recognize teamerages,” Murray said. “If a team leaves a big brokerage to become a standalone brokerage, then they are an independent brokerage. They may still operate their internal business like a team, but that is just the operation model they use.” Others, however, believe teamerages can exist within franchises or national brokerages such as eXp Realty or Side…Despite their different viewpoints, what most can agree on is that teamerages supply their agents with more training, mentoring and services, such as transaction coordination, listing management, compliance, marketing, a CRM, and other technology tools than most traditional brokerages. Most teamerages also supply their agents with leads.”

RE/MAX Broker Shares His Journey from Independent to Franchise Model (RIS Media, Oct. 15, 2021)

John Noughton, a Broker/Owner in New Hampshire, was an independent real estate agent looking to grow his business. He realized that, for him, the best way to put his agents first and provide them with the tools, technology, and marketing needed to achieve the growth he had in mind was to become part of a larger franchise. Brand recognition is huge, but making sure the culture of that brand fits your agents is sometimes even more important.

eBooks & Other Resources

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Consultant & Independent Contractor Agreements (eBook)

Creating An Independent Income In Real Estate! (eBook)

Free Agent Nation (eBook)

Real Estate Confronts the Future (Thompson South-Western in association with RealSure, Inc., 2005) HD 1375 SWCR

Business Lessons for Entrepreneurs: 35 Things I Learned Before the Age of Thirty (Thompson South-Western in association with RealSure, Inc., 2003) HD 2346 C89

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