Success factors of the franchise-system in the real estate industry : a comparative study of the self-proclaimed "Market Leaders"

Abstract

Franchising is a common business model, which gained popularity in a wide variety of industries in the previous decades. Franchising offers an effective method for building a national network without the essential management establishments, time and capital investment from the company. The other success factor of franchising is the scalability of a structured business model that can usually be applied to every sector, from catering to financial services. Based on this insight, it is quite surprising, that one of the most successful franchise companies is based in the real estate industry, which is by its nature, a business with great regional differences, a complex product and a long decision process of the customer. The company being referred to here is RE/MAX, which provides real estate services in commercial, residential, relocation and asset management, and was founded in 1973 in Denver, United States. Today it has become an international leader in the real estate sector; it built up the biggest and most productive brokerage franchise system in the world. RE/MAX operates with an average of 100,000 sales associates and with more than 6,000 offices in 95 countries. Taking international market-insights into account, it can be concluded that in the long run, the global real estate market will be in the hands of a few huge real estate companies, which will be introduced in this thesis. How can the real estate franchise system be so successful and yet so generally applicable at the same time? The aim of this thesis is to show the main factors that lead a real estate franchise company to success and give an outlook on the development of the real estate brokerage market in Europe, as there are still numerous undeveloped opportunities in this sector.