What’s The Difference Between A Franchise And An Independent Real Estate Brokerage?
Most people have heard of a franchise before and at least sort of understanding what it is and why someone would join a franchise, and some of that information does translate to real estate — but when it comes to choosing a brokerage, most new agents especially aren’t sure about the differences between an independent and a franchise brokerage, or which one would be best for them.
Only you can say for sure whether you’d prefer working for an independent or a franchise brokerage, but it’s important to know how they’re different (and how they are similar) so that you can make an educated choice and start your real estate career on the right foot.
What’s the difference between an independent and a franchise brokerage?
The easiest way to explain the big difference between the two types of brokerages is to describe ownership and operation. A franchise brokerage is usually owned and operated by a broker as part of a franchise group; the broker agrees to follow the franchise’s rules and regulations and branding guidelines, and to pay a portion of brokerage profits or agent commissions to the franchise, in exchange for access to the franchise’s brand name, educational and technological resources, and more. (To complicate things, there are also some franchise brokerages that are owned and operated by the franchise group or a subsidiary of the franchise group itself.) Some well-known real estate franchise names include RE/MAX, Keller Williams, Century21, Coldwell Banker, Sotheby’s, and many others.
By contrast, an independent broker is owned and operated by a broker who has no affiliation with any franchise. These types of brokerages have full independence in the sense that they don’t have to adhere to corporate marketing, branding, or process guidelines. Although they don’t have to pay franchise fees, they also don’t have access to the brand recognition, training, or technology resources that a franchise can bring to the table.
Two branches, one tree
One important thing to remember before we dig further into the differences between an independent and a franchise brokerage is that there are plenty of similarities between the two ways of operating a real estate brokerage. Both independent and franchise brokers are members of the MLS (multiple listing service). You’ll find independent and franchise brokerages at all levels of real estate in most markets — independent brokerages don’t necessarily have a corner on luxury sales (for example), nor do franchise brokerages always dominate entry-level transactions. Independent and franchise brokers alike are expected to adhere to standards of professionalism and client advocacy, regardless of which type of operation they are.
The costs for real estate agents can vary widely across both independent and franchise brokerages, as can the culture (and attention paid to culture), and level of support offered to new and experienced agents alike. Don’t assume that an independent brokerage won’t have a very corporate culture, or that a franchise is going to be buttoned-up every which way; also don’t assume that you won’t get any ongoing training or support at an independent brokerage while a franchise will offer you those opportunities. There is a wide range of ways to operate a brokerage that manifest across both independent and franchise establishments, so make sure you aren’t basing a brokerage decision on stereotypes instead of evidence.
Why work for a franchise?
There are plenty of reasons why agents (and especially first-time agents) might choose to start their careers working for a franchise brokerage. First and foremost, franchisees have brand recognition and national clout. These are real estate brands that we see all across the country and that consumers know, like, and trust, so the uphill battle of establishing recognition with buyers and sellers has already been done.
Oftentimes, franchise brokerages also have referral partnerships and networks that extend across the country and even all over the world, which can be helpful when you’re trying to find clients. Many franchises have structured training programs to help you learn your way around the real estate world, including continuing education modules and opportunities.
Franchise brokerages have typically invested a lot of money in an online presence that’s robust and visible, and they also usually offer more cutting-edge technology and marketing tools for agents as part of the package.
Why work for an indie?
The biggest advantage that independent brokerages have over franchises — and it’s a big one — is freedom and flexibility in running a business. An independent brokerage is able to react swiftly and decisively to market changes in a way that a big, unwieldy franchise is simply incapable of managing. Many independent brokers have translated this agility and ability to innovate into different areas of running a real estate business, such as more innovative and specialized education for agents. Some agents who feel that franchise brokerage education programs are too basic and geared toward entry-level real estate professionals might benefit from working with an independent brokerage that’s crafted specific, targeted educational materials for agents in certain niches and at certain levels of the profession.
Independent brokers also may have more freedom to negotiate contract terms with agents than their franchise counterparts, which may be bound by corporate guidelines when it comes to the commission splits they can offer. And independent brokers almost always have deep local market understanding; they care enough about the local community to establish their small business there, and they have usually been operating in the same area for long enough to learn everything there is to know about how real estate operates.
There’s no one right answer when you’re considering a franchise brokerage or an independent brokerage as the next jumping-off point for your real estate career — there’s only what’s best for you. Think about the pros and cons of each, talk to the brokers at the brokerages that seem like the best fit, and learn everything you can so you can make the best possible decision.