Brokerage "owner" vs. "owner/operator" for a new business model

[Chris Martin]

Unlike fast food franchises, I'm not seeing where real estate brokerage franchises are set up as "owner" franchises. It seems like 99% (or more) of real estate brokerages are "owner/operator" set-ups. The "owner" is the licensed broker, and that owner/broker is broker-in-charge (or whatever the state sets as the official designation) and runs (is the "operator" of) the operation.

If it isn't clear, I am not a licensed broker. Car dealerships, fast food establishments, hair care services, ... all these franchise types (and more) have franchise owners who are established in multiple locations, some in multiple states. These franchise owners clearly can't be operators in all the locations. What I'm looking for is if anyone knows of, or is, set up just as an "owner" of a real estate brokerage. Franchised or not, I'd like to know how many of these "owners" (but not operators) have multiple locations or are thinking of expanding to multiple locations. What are the terms with your operators? Are your brokerages set up as separate entities? Do you partner with the broker/operator, and is there a preferred entity structure?

I have no interest in being an "operator". I'll hire a BIC. I'd prefer to invest as an "owner." And, no, I don't care about getting MLS access. I would prefer as an "owner" to focus solely on business development. Essentially, my motivation is 'proof of concept' for an investor centric real estate brokerage with a different model than what exists today. I'd like BP Nation's thoughts about the concept of brokerage "owner" vs. "owner/operator". For you licensed brokers... would being a broker, with a franchise structure and support (but without the ownership overhead (office cost, MLS fees, etc.)) be appealing?

[Steve Chaisson]

Please don't take this personally, but if you don't know the brokerage business well enough to have a pretty rudimentary understanding of the regulations and relationships between owners and brokers in charge you probably shouldn't attempt a franchise model without first running your own shop. In Tennessee, anyone can own a real estate business, and a broker in charge is supposed to be at the office 40 hours per week.

I think the real estate industry is ready for a new franchise model. I don't know that calling yourself "investor-centric" is sufficient differentiation within the business space.

Keller Williams and Exit transformed the business space a bit by focusing on the recruiting model. You must notice also that Gary Keller and Steve Morris are dynamic individuals who are strong leaders. If you try simply applying a model and excusing yourself from the leadership component that is required to manage a bunch of lazy, insane salespeople it won't work. You're probably not a multinational conglomerate like Berkshire Hathaway that owns numerous other service providers in the industry, and you're not RE/MAX, who is effectively continuing to profit from being the biggest dinosaur on the block for a long time.

I hang my license with a local 100% broker. I pay nothing if I use their affiliated title relationship. I cap at 3k a year if I use my own title attorney. That's it. I'm an investor, and I don't need a broker. You can't compete with this in my area among agents with an investor niche unless you are truly adding value through something innovative - or unless you are an incredibly effective leader, trainer, and motivator.

I welcome ideas but I would warn you that the franchise model for real estate is an extremely difficult business space to enter.