Franchising has been a valuable expansion mechanism for Jawitz Properties and has achieved a 44 percent growth year-on-year.
Being part of a brand with a proven infrastructure that offers support and back-up, frees franchisees from having to source these skills themselves and allows them to focus on their core business competencies and profit generation, he says.
The network of independently run real estate offices in geographically diverse locations has proved to be a successful strategy to grow the business.
To date the company has 38 franchises spread over the Eastern, Western and Southern Cape, the Free State, Gauteng, KwaZulu-Natal, Mauritius and Botswana.
Jawitz Properties intends aggressively marketing franchises in KwaZulu-Natal, Mpumalanga and Northern Province in 2013, says national franchise manager Pieter Davidtz.
Davidtz is not surprised at the increase in small independent real estate agencies switching to franchising.
“Franchising is a tested business model that provides immediate support with training, marketing, financial and business plans.
“Staying competitive in today’s property market, without the backing of a multi-national, has become more difficult.”
He explains that there has been a substantial shift in the property business model over the last five years largely due to the state of the economy, the banks’ lending restrictions and the costs and time involved in marketing and staff training.
Being part of a brand with a proven infrastructure that offers support and back-up, frees franchisees from having to source these skills themselves and allows them to focus on their core business competencies and profit generation, he says.
Bendeta Gordon, founder of Franchize Directions says that the 31 real estate companies which operate on a franchise basis have shown remarkable resilience despite dramatic market changes over the past three to four years.
The Franchise Factor® 2010, a study which tracks the growth of franchising shows little fall off of real estate franchisors between March 2008 and February 2010 despite the real estate category coming under more pressure than any other business category in which franchisors operate.
The franchise mechanism works well in real estate because it allows for flexibility in infrastructure.
Comparatively low set-up costs and overheads are also flexible because agents work on a commission basis.
“Franchising is the ideal mechanism particularly when the consumer comes under pressure and is more discerning with their spending,” she says.
She says national brands representation, proven management, marketing and operational systems and just the magic that comes with being an owner-operator are the ingredients for success for franchisors.
Davidtz says that the internet has given industry players the advantage of marketing properties and disseminating referrals instantly.
Boundaries have become blurred as there is easy access to global partners such as Leading Real Estate Companies of the World and Luxury Portfolio International.
A sophisticated web presence, which is beyond the financial reach of most independents, is no longer a ‘nice to have’.
Differentiation becomes the key, however big or small. Even with all the value-add of being part of a national brand, a successful real estate franchise still relies on the entrepreneurial ability of the franchise principal.
In addition, since the introduction of the Consumer Protection Act, compliance has become mandatory and a franchisee needs to be familiar with its provisions, the training of which is provided by the parent company.
Competition is tough and gaining market share is critical for success especially in many of the smaller towns and cities that are saturated with estate agencies.
Differentiation becomes the key, however big or small. Even with all the value-add of being part of a national brand, a successful real estate franchise still relies on the entrepreneurial ability of the franchise principal.
Davidtz is careful to point out the value-add goes both ways.
“The partnerships with our franchisees have played a vital role in accessing areas and communities that previously were outside our reach.”
“Their knowledge of the local property market and their networks are critical to the group and we are fully aware that what works in one city or part of the country may not work in others,” he says.
Brian Hickman, Jawitz Properties’ principal franchisee in Midrand who was previously the group sales and marketing director for a large logistics company doubts whether he would have made it as a real estate independent given the challenges his team has had to overcome during the past five years.
Hickman says without the support from a reputable brand that provides infrastructure, training, business and personal development and marketing as well as the latest market information and analysis, it would have been difficult for his franchisee to provide the kind of service that today’s consumer expects.
Over the past six years, despite a difficult and increasingly challenging market the Midrand franchise has consistently grown profits and increased sales and rental market share by 15 percent year on year.
Jawitz Properties with 42 years of experience has a strong family culture and believes in immediately aligning the franchisee with the franchisor.
“Success in franchising is not only about technology, marketing and brand manuals. Corporate culture and relationships play a crucial role,” says Davidtz.
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