Margaret Kelly stepping down as RE/MAX CEO

Well it had to happen sooner or later. The decline of how this once great company was run has been known for years. The question now is who really understands the brand and who can lead a company that once was the greatest real estate franchise in Real Estate?
What will happen if the CFO does not return from a family health matter. Both the CFO and the CEO have been selling off RMAX stock. Who will buy RE/MAX Holdings? I thought about it but Halloween is over. Skeletons transformed into Zombies and not worth the risk. Those great RE/MAX Brokers are there to pick up the slack until the time comes for a company wide transformation.

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A Shift In The Market

While I spend virtually no time on my Web Site I get more and more calls from those considering the merits of a so called Named Brand.
There are multiple directions being considered by real estate brokers.
1. Brokers who have been private label are looking for potential affiliation.
2. Existing Franchisee’s are looking to either go Private Label or to switch brands do to the lack of service and or excessive fee’s from their existing Franchisor.
3. Some agents who have been with RE/MAX for 20 years want their own company but know they cannot go RE/MAX due to the fact there are too many RE/MAX offices in a given market whereby the offices are unprofitable. One such gentlemen asked me that if he purchased a Realty Executive Franchise would I coach him to success. Heck yes was my answer. He actually was thinking the right way. It’s called Reverse Thinking. Do the unexpected and be more exclusive in a given market. After all Realty Executives was around before RE/MAX was invented.
So as one brand declines another brand can reinvent itself.
Do not buy any Real Estate Franchise unless you have exclusivity geographically.
Call me if I can help. Mike Stefonick # 610-659-1173.

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The Power of Branding + & -

Brands come and go. Remember RCA and Zenith TV’s? Sony BetaMax. Merrill Lynch Real Estate was purchased by Prudential because the ML management team could not figure out how to make the returns they wanted. Gallery of Homes dissolved, Prudential sold out to Warren Buffet. The Edsel, Mercury, and Oldsmobile are gone. There will always be a new Brand because there will always be improvement to existing franchises that slowly die out. Some are purchased just to shut them down or merge into something else.

I still coach RE/MAX Brokers and know how they feel. The RE/MAX Brand will one day fade away. I fear the infighting among regional owners and Corporate have created a conflicted unhealthy environment. Greed, mismanagement, lack of innovation due to regional ego’s, and overly restrictive franchise contracts are major issues. The inability to change with the times will foster it’s demise. It has already started. The twinkle of that once shining star is fading. The hot air in the RE/MAX Balloon is cooling. The symbolism of a steer less balloon has never been more appropriate.
It will take real change at the top to stop it’s decline. In my opinion the next 12 months are critical. As the aging big time RE/MAX Brokers retire, not renew, there will be nobody to fill the slots. It takes a strong leader to build a RE/MAX business. The youth don’t want to work that hard. The RE/MAX business model must change if it is to survive. Keep and eye on RMAX stock. I do not own it and never did.

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Coming soon, Video Real Estate Franchise Coaching

Stay tuned. For more info Contact Mike@Optimix.com or call Mike@ 610-659-1173.

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Time to turn RealEstateFranchise.com on again

It has been too long since I have posted to my site. I need to get back into the swing of things and offer more help to those who need franchise coaching advice. My post does produce phone calls. Recently I got a cell phone call from a French Real Estate Broker asking me if he should buy a RE/MAX franchise. I told him I do not know French law that he has to consult a French Attorney. He said why? I would guess that 9 out of 10 Brokers will not take the franchise agreement to an attorney due legal fee’s but invest $25,000. to buy a franchise. Most real estate sales people who buy a franchise are not business people. They are sales people who live from sale to listing to sale. They will not take the time to recruit because they don’t like rejection.
There are very few people like this lady. http://www.staceyalcorn.com. She just dropped the RE/MAX Brand in New England. She had 14 RE/MAX offices and is going private branding. Do I think she will succeed? Heck yes. If you look at her bio you will see why her former Regional Owners are in a panic. They just gave away, according to some RE/MAX Brokers, 13 (10) year franchises contracts for a sale price of $1.00 each. She will grow a company more successful than any real estate office in New England.
The impact of that move will affect every RE/MAX region in the US. How does a franchisee in PA, FL, SC renew their 5 year contracts of $ 8k, 10k, 15k or what ever the contract states if someone just bought the same product for $1.00.
What will the Federal Trade Commission say about that act. What will the SEC say about that to RE/MAX Holdings, LLC? since they have to approve every franchise sold by the sub-franchisor. I guess time will tell. I do not know Stacey or have even spoken with her at this point in time. So I do not know the real reason why she departed the RE/MAX Brand. However many others have done the same thing.
Can she succeed on her own. Hundreds have. You don’t need to buy a franchise to be successful in the real estate business.

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What Company Wants More Productive Agents?

Who wants more productive sales agents?

How much money are you willing to pay for an agent that can earn you more than your cost of recruiting them?

It’s all about ROI’s.

I have the solution if you are willing to ask for help. Being proud in real estate means going broke. Look around. How many brokers are failing or have gone out of business?

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Dig Deep When Buying a Real Estate Franchise

Well it’s been a while since I did my last post. Many things have changed in the real estate business. Systems, technology, corporate leadership, and the financial condition of many franchisors.

This post is going to be short and down to the hard facts. If you are considering purchasing a real estate franchise I want you to understand my statements. Your better off, in my opinion, purchasing one with only one figure head. What does he mean? In the early days of franchising, franchisors sold what are known as Regions. They did that to raise capital for expansion because they had very little funding. Over time these various regions took on a life of their own. Different management style, intellect, ability, leadership, personality, and even a different philosophy. That created a problem. Internal disputes were very prevalent. Different ad campaigns which distorted the visuals and which diluted the trademark and brand. Many of the so called regions were better run than that of the founder of the parent company. Smarter regions created a major problem. What to do with the parent company. They could do nothing, but went back and just grew their own successful business.

You have to understand that in a franchise everything is somewhat connected. Meaning you could be in a region that is owned by someone in CA. When the annual convention is held in some city outside of CA agents from all over the country attend. They then get to compare information and find out that their region operates to a different standard of franchise contract. Wow does that create a problem. One region has exclusive territories and another has address only. Contracts are different, renewal fee’s are different, office size requirements are different and it goes on and on.

That my friend is a dysfunctional franchise that is destined to crash. Remember GM went bankrupt. They had too many brands and hats to take care of. Ford almost had the same problem but woke up just in time. They got rid of Land Rover, Aston Martin, Volvo, Jaguar and other partnerships so they could focus. Now they are very profitable.

The only major brand I can think of that has one real leader is Keller Williams. One message, one figure head and one system. It’s do it his way or the highway. That is why they have 88,000 agents in the US and growing.

My advice is stay away from the franchisor with multiple figure heads. You do not need to get caught in an internal conflict. Your job as a salesperson or broker is to grow a business and earn an exceptional income. Stay away from someone else’s problem.

Now go out and be productive.

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Before buying a real estate franchise question the quality of the training program and how many franchises left the brand in the prior year.

A friend recently posted a link on Facebook featuring Earl Nightingale.  It’s a short 6-minute video that has been on You Tube for some time. Almost 150,000 people have viewed this video.

http://www.youtube.com/watch?v=ajIRxdeCRZM&feature=player_embedded

After viewing it the message hit home.  As a real estate consultant and coach to real estate brokers, I am struck by the poor quality of training many new franchisees’s received.  Real estate brokers invest huge dollars in attempting to build a successful business.  Many will buy a franchise from one of the major brands thinking it will enhance their image in the market.

Sometimes it will work and many times it will not. The problem starts with inferior franchise training and poor follow up by the franchisor to insure proper execution of what was taught.

Having said that I want to Quote Tom Peters in one of his recent quotes: One size NEVER fits all. One size fits one. Period

Franchise training is a process. It is repetition of a perceived method of operation which does not like change.  If a given brand experiences massive failures you would think someone in training would say to senior management, Houston we have a problem. Instead of modifying the programs to adjust to the current market reality either in content or duration of training time, management maintains the status quo thereby perpetuating more and more failures.  Continued failures will result in the brand losing it’s perceived value. In the end both the  franchisee and the stockholders of the franchisor are damaged.

Someone may want to check his or her watch.

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Here Is A Point To Ponder

Ponder this!

If you as an existing franchisee who once paid $25,000 more or less for a 5 year term and that franchise relationship never showed a profit to your company, would you pay another $25,000.00 more or less to renew for another 5 years?

If you as a broker or agent were offered a real estate brand for FREE with no renewal fees would you do it!

In reality many in the first question do renew and still continue to lose money.

Those in the second question do it, but don’t want others to know it was FREE.

The moral to the story is why pay some franchisor a load of money up front and renewal fees when they want you to also pay them monthly production fees based upon your success and not theirs?

Ponder that!

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Stop thinking about buying a real estate franchise if you want to make a great living.

Over time we tend to adjust our thinking and perspectives of how we want to conduct our business. I’m referring specifically to the real estate industry and directly to the real estate agents and broker/owners.

The industry is very attractive based upon the ability to operate as an independent contractor. No set hours and you are rewarded based upon your own ability to produce results in servicing either buyers or sellers of real estate.  In the last 40 years many Real Estate Franchise companies have been started and then promoted. From there the brand was used to attract new franchisees and agents to work within those franchises.

The end result is that the franchise industry has captured over 60% of the real estate market in the United States. The franchisors did very well and far better than the franchisee’s that believed in a specific brand.

Just because someone buys a franchise does not mean they will be successful. The franchisor, as they are known, does not warrant or guarantee success. That is entirely up to the franchisee.

Who buys a franchise and why do they buy a franchise?

Most are purchased by either an independent real estate brokerage company, or an agent within that company who feels they want to grow a successful business using the business model of a specific franchise.  Some franchise companies are easy to deal with others having no clue as to how to listen to their customers. Those that cannot hear soon find that the franchise has switched either to another brand or decided to private brand itself.

The reality is that many people who purchase a franchise really should not have done so.

The reason is they possibly were not qualified to manage a business or did not have the personality to lead.  Leadership is paramount.

Many franchise sales people never sold real estate.  The next time a salesman attempts to sell one of these great brands ask the salesman, if it is that great why don’t you own one?

Over the last 30 plus years I have seen many so called franchisee’s fail.  I have seen great sales people over extend themselves to build a successful real estate office and let their ego over rule the primary objective for being in the business.

The objective should be to earn a great living and have total control over your own destiny. What they really should have done was to say, OK I am going to be very successful in the business and will align myself with a quality company in my market.

I will go to work and build my personal book of business.  The better I serve my customers the more referrals I will receive and the more money I will earn without having to make any major investment in office buildings, support staff, insurances, and reporting to a franchisor.

At this juncture I feel STRONGLY that there is no need for any more real estate franchise companies.  An agent can name his/her own ticket and have a super career with no headaches of running a company.  Many existing brokers wish they had done just what I suggested years ago.  They know it was not worth the pain of being a baby sitter to everyone in the company.

All an agent has in life is 24 hours a day to make a living, raise a family, take a vacation now and then, and build a retirement account by purchasing an investment house every year. That is exactly what I taught my agents when I founded RE/MAX in PA in 1978.

At this point many of those agents became millionaires following that suggestion.

In closing, if a young real estate agent wants to truly be successful I recommend stay an agent or associate broker with a quality firm.  Don’t make the mistake that so many others have made of buying some franchise and then wasting your time, money, and maybe even your family by working too much and taking too many risks trying to help other agents who don’t have the same work ethic as you.

However if you’re like so many others who insist on buying a franchise do your research. Not just ask but get the real stats on how many franchises of a given brand have failed in the last 10 years. You will be shocked.  If you find there are more than a thousand, two thousand, or even more you must know something is Rotten in Denmark.

Wishing everyone the best of luck with a great career in real estate sales.

Michael J. Stefonick, CEO

Optimix Marketing, Ltd.

506 Colonial Drive

Hilton Head Island, SC 29926

888-393-1230

Executive Coaching & Management Strategies for Real Estate Professionals

RE/INVENTING Real Estate Brokerage To Improve Your Bottom Liine.

Real Advice/Real Results

A quote from a client: “ Mike your words are great. I’m glad you don’t have

any clients in my area”.

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