What are the advantages of joining a franchise? What are the advantages of selling? As the market rapidly changes, the benefits either way may be blurred in the race to provide the home-selling and buying consumer with the most services. And that is what it's all about to the consumer, isn't it? Who can do the most for the least?

Why the push to consolidate now? The timing is right. The real estate industry nationwide is benefiting from the unprecedented alignment of a number of economic factors, including record lows in unemployment, interest rates and inflation, higher national salaries, and the positive buying mood of the consumer. Never in recent history has there been a better time to buy a home, or to sell one. According to John Tuccillo, economic advisor to the National Association of Realtors, for the first time in decades, the economy favors both the buyer and the seller. Translation: The industry has never been healthier.

What does this mean to the independent? For the enterprising entrepreneur, a good market represents the chance to build a niche. And for the successful independent, it affords the chance to join a big gun, either through a franchise or by selling outright.

Fred Sands, president of Fred Sands Realtors, has built his firm from one office in Beverly Hills, Calif., to the seventh-largest realty firm in the United States. He began as a successful agent, then made the leap to broker/owner. After doubling his company's size over the last three years, Sands plans to double in size again this year, and every year thereafter until he reaches his five-year goal of more than 500 offices. How is he planning to do it? By franchising to key independents.

About his aggressive franchise plan, Sands says, "The real estate market was down, and now it is back up. Many of the independents we are interested in having as franchisees have not been able until now to show their solvency. Now the conditions are right." What have the franchisees got to gain? The marquee value and service ethics of one of the nation's most prominent firms, as well as a share of the profits generated from the relationship.

Other brokerage firms are saying yes to selling out, taking the bull market as an opportunity to get out while the getting is good. Virginia Cook, president of Henry S. Miller, Realtors, the largest independent real estate brokerage in Texas, says the advantages of remaining independent are only there if the company has already acheived size and stature. "A large company can offer a small independent a lot of advantages," Cook says. "It can share the power of its name recognition, which translates into significant dollars as far as advertising is concerned. It can afford specialized departments of service to clients and agents, such as relocation, training, and technology. These are services that the independent doesn't have the time or resources to provide on their own. And that's what it's all about -- the service you can offer."

Recently, the Miller company purchased several key independents to gain advantage in niche market shares. One of their prize acquisitions was Allie Beth Allman Real Estate in the exclusive Dallas community of Highland Park, where the company is market leader and continues to operate under its own name. Founder Allie Beth Allman says she sold because she got tired of the headaches of everyday management. Miller was glad to have the strategic office along with its agents who had experience with high-dollar clients and real estate. "This is a market where you have to have all the skills in order. Our agents are educated, well-dressed, attractive. They can communicate on the most sophisticated levels with buyers and sellers."

At the same time, broad-based competitor Ebby Halliday Realtors purchased niche luxury brokerage and Allman competitor Ellen Terry Realtors. "I sold because I found I was getting too far from my roots. I wasn't getting to meet clients anymore. I was always on the phone or in meetings," Terry says. The key in Dallas, as in other markets, is that the broad-based realty firms are after key positions in desirable markets.

"That's the trend," Cook adds. "Despite record growth in the industry, you will start to see more consolidation and closing the doors on offices that aren't as productive."

Whether a company franchises or not, the large independents are in agreement that they have more to offer independents than they can enjoy on their own -- except independence. And the irony? Sands, Miller, and Halliday are all independently owned and operated.

Published: February 23, 1998

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