Franchising has proved to be the ideal way for residential property marketing groups to expand their footprint nationally and recruit top performers, says Bill Rawson, Chairman of the Rawson Property Group.
“Franchising is ideal for a market in which there is a growing trend towards self-employment. Those writing the history of the property sector 10 or 20 years from now will, I believe, record that the first 15 years of the 21st Century saw a massive improvement in the way property was sold and, equally impressive, a big upgrade in the standard of those serving the industry,” said Rawson.
This, he said, will probably be attributed by analysts to:
1. The big staff reductions carried out by South Africa’s major corporates during the period referred to. These, said Rawson, forced often highly competent middle and senior managerial to look for new jobs and to forge new careers.
2. A growing belief in, and knowledge of, residential property and a rising confidence in its ability to ride out downturns and continue to give satisfactory returns.
3. The comprehensive, thorough training which is now being made compulsory by the Estate Agency Affairs Board and their readiness to give significant credits to those with other qualifications coming into the industry for the first time. This training, added Rawson, is in all the best franchise groups complemented by on-going in-house training which is equally valuable.
4. The introduction of franchising to residential property marketing.
“The classic definition of franchising is ‘a system which allows a new organisation to make use of and benefit from proven established business models – and this, I believe, adequately sums up why franchising has become so popular.
“The system’s big advantages are that it enables new start-ups to get a flying start and to become established more quickly and successfully than enterprises that begin from scratch and have to cultivate and develop reputations and brand awareness from ground level.”
The Franchising Association of South Africa, said Rawson, has shown that 50% of new businesses do not get through their first year and a further 25% do not survive the second year. However ± 70% of franchise operations are still going after the two years and 50% last ten years or longer, many being sufficiently profitable to be put up for sale after five years.
Working under a nationally recognised brand, said Rawson, gives the franchisee a far greater ability to attract clients and staff, both of whom will have confidence in the brand. It also facilitates funding.
“This is quite logical because the public perceive, correctly, that major franchisors with a reputation to protect do not appoint franchisees too easily.”
Recapping on the above factors, Rawson said that the major benefits of franchising are that the franchisee will, to a far greater degree than he probably realises be helped by the national marketing of the franchisor and the success of bigger franchisees in the same group.
Equally if not more important, said Rawson, he will benefit from the on-going training that he and his staff will get from the franchisor.
“I do realise that in repeating these major benefits I am probably gilding the lily, but their benefits cannot be over-emphasized,” he said. “Training, in particular, is important. Staff receiving this training will perform better than average and will appreciate that they are being empowered and will therefore be reluctant to leave for another group which does not offer the same level of training.”
Rawson said that the successful franchisee ‘gains control of his future’ because he can always sell a profitable franchise if and when he wants to move on or retire. In many areas he may be able to split his franchise into two or even three operations and sell some of these off. If he is ambitious, he will also probably be offered the opportunity to acquire more than one franchise, usually in an area fairly close to the initial operation.
“Our experience,” said Rawson, “has been that franchising immeasurably increases the quality of those being recruited into the business. The franchise system appeals to the highly educated, independent, go-getter, the true professional who wishes to be in charge of his own future and to do it ‘his way’ and this is exactly the type of industry he needs.”