Business models / Real Estate Brokerage / Own a franchise

A real estate brokerage franchise, or your own?

Nine franchise brands run a real estate brokerage. Here they are beside the independent version of the same business, with each brand’s fees as it publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.

Typical for a real estate brokerage: $1M to $15M in sales, and the owner keeps 5% to 10% after paying for its own marketing. Change either to your own numbers.

How the two sides are counted

  • Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
  • Marketing. On your own you pay for all of it, about 3.5% of sales here. The ad fund does part of that job, so it is counted once, not twice.
  • Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
The independent version

Your own real estate brokerage

Built and run under your own name

Cost to open
$56k to $272k
Annual sales
$3.9Mtypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$309,600
The owner keeps in a year, after about $135k of marketing
Taking new owners

Realty Executives

Real estate brokerage

Total investment
$24k to $131k
Avg. annual sales
Ask the brand
Franchise fee
$1k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners

Better Homes and Gardens Real Estate

Real estate brokerage

Total investment
$32k to $448k
Avg. annual sales
Ask the brand
Franchise fee
Not listed
Royalty + ad fund
5% + 1% of sales
$116k
The owner keeps in a year at $3.9M in sales (your sales), after $232k to the brand
$194k less a year than on your own
Taking new owners

ERA Real Estate

Real estate brokerage

Total investment
$33k to $447k
Avg. annual sales
Ask the brand
Franchise fee
Not listed
Royalty + ad fund
6% + 0.5% to 1.5% of sales
$77k
The owner keeps in a year at $3.9M in sales (your sales), after $252k to $290k to the brand
$232k less a year than on your own
Taking new owners

Coldwell Banker

Real estate brokerage

Total investment
$34k to $522k
Avg. annual sales
Ask the brand
Franchise fee
Not listed
Royalty + ad fund
5.5% + 0.5% of sales
$97k
The owner keeps in a year at $3.9M in sales (your sales), after $232k to the brand
$213k less a year than on your own
Taking new owners

Century 21

Real estate brokerage

Total investment
$36k to $473k
Avg. annual sales
Ask the brand
Franchise fee
Not listed
Royalty + ad fund
6% + 0.5% of sales
$77k
The owner keeps in a year at $3.9M in sales (your sales), after $252k to the brand
$232k less a year than on your own
Taking new owners

RE/MAX

Real estate brokerage

Total investment
$37k to $337k
Avg. annual sales
Ask the brand
Franchise fee
$9k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners

Realty ONE Group

Real estate brokerage

Total investment
$47k to $228k
Avg. annual sales
Ask the brand
Franchise fee
$19k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners

HomeSmart

Real estate brokerage

Total investment
$66k to $205k
Avg. annual sales
Ask the brand
Franchise fee
$20k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Selective

Keller Williams

Real estate brokerage

Total investment
$183k to $337k
Avg. annual sales
Ask the brand
Franchise fee
Not listed
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Free account

See all 9 real estate brokerage brands side by side

  • Every brand’s investment and fees, and what the owner keeps against running your own
  • The yearly sales the first 3 report, and a plus to add brands to your comparison and benchmark them in your account
  • Members see the sales every franchisor reports, for every brand

Free, no card. A new account accepts the Terms and the Privacy Policy. smbnest is a self-assessment tool and never takes a cut of your deal or a fee from a franchisor.

Before you sign: what to read in the disclosure document

Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.

  • Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
  • Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
  • Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
  • Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
  • Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.

smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.