The latest top 500 Franchise Study undertaken by the USA-published Entrepreneur magazine has placed real estate group RE/MAX International in 11th place overall for 2006, just below the globally recognised hamburger icon McDonald’s (in ninth position) and five places ahead of the next closest real estate company (Century 21 Real Estate in 16th position).
Top honours went for the 15th year in a row to sandwich giant, Subway.
RE/MAX. according to a RE/MAX Southern Africa media release, also moved from 9th position last year to 6th overall in the magazine’s International Global Franchise Survey.
Now in its 28th year, the Entrepreneur study looks at thousands of franchise models across the globe, rating them according to factors such as the financial stability of the group, the number of units in the system and whether these show viable year-on-year growth, as well as name recognition.
Acknowledging the 500 Franchise listing, Ronan McCool, Operation Director for RE/MAX of Southern Africa – the group celebrates 12 years in South Africa this year - explains that: ‘The success of RE/MAX both globally and locally is a result both of it’s ability to attract people with an entrepreneurial mind-set who share the group’s overall vision, as well as its huge market presence – a factor which always gives customers both a sense of security and service delivery.’
Founded by Dave and Gail Liniger in Denver in 1973, RE/MAX is today a global network of more than 120 000 sales associates operating in 63 countries through more than 6 500 independently owned offices.
McCool says along with a core group of pioneers, the Linigers’ vision was to break what they saw to be ‘the vicious cycle of the real estate industry’ whereby the most successful agents would become disillusioned working for larger real estate companies and leave to start their own firms.
“By doing this, they not only created the same situations for other agents they themselves had abhorred but in turn incubated their own future competition, thus further segmenting the market.”
Regardless of the size of the operation, most real estate companies utilise the commission-split system, in which agents forfeit a percentage of their commissions to their brokers in exchange for an office base. Thus top earners contribute the most to the operation’s overhead, in effect supporting and subsidising both the low-producing agents as well as the invariably large influx of new agents.
As a result of their research, the Linigers found that top sales professionals were leaving companies to move to others or start their own business on average within two years, making the real estate environment the high-turnover industry it has become with the resultant large numbers of inexperienced and unprofessional agents taking the place of the high-earners.
Creating the by-now well-known ‘Everyone Wins’ slogan behind the RE/MAX brand, the Linigers structured the RE/MAX franchise model not only to provide agents with a maximum commission concept, but to place them in charge of their own businesses in environments where office expenses are split equally with other agents and where they would happily co-exist and co-operate, helping to strengthen the brand.
Realising therefore back in the 1970s that overwhelming market presence would be the success of his franchise model, Dave Liniger coined the phrase Premiere Market Presence (PMP) which aimed to secure five aspects for the RE/MAX network: 1) market share, 2) brand name awareness, 3) customer satisfaction, 4) quality associates and 5) community service.
Initially, most RE/MAX agents and franchise owners had problems with the idea of market share, and the initial franchises were sold by Liniger in areas which proved brokers with a large territory – minimising competition from RE/MAX itself.
However, Liniger soon discovered that the more RE/MAX presence there was in an area, the higher the average earnings of all RE/MAX agents in the area. In areas where PMP had occurred,RE/MAX agents got 70 percent of their business from referrals and repeats as a result of benefiting directly from extensive brand awareness.
In other words, the more RE/MAX ‘For Sale’ signs, advertisements, brochures or sponsored community event there was in an area, the more his independent entrepreneurs benefited.
Over the years, the network has grown not only in size but in terms of the advanced support services the group relies on. In their book 2004 book, Everybody Wins: the story and lessons behind RE/Max, authors Phil Harkins and Keith Hollihan compare the RE/MAX network to a fax machine, noting that while one machine on its own holds no real value, a network of fax machines in offices around the world resulted in immeasurable value.
The RE/MAX network also has the distinction of being a company that has grown every single month for more than 30 years – a claim very few international companies can make.
It has been the leading real estate network in Canada since 1987 and over the past few years has expanded outside North America into Africa, Asia, Australia, the Caribbean, Central America, Europe, New Zealand and South America.
Some of the innovative support services RE/MAX International has created to help its members include relocation and asset management, commercial investment, an international referral network, an advanced 90-day internal training programme for both experienced and beginner agents, internet and extranet Web operation, and television advertising campaigns.