Top agents profit from boom in real estate
THE substantial growth in the services sector is one of the features of the expansion of franchising in South Africa.
Richard Shapiro of Ernst & Young says that the old adage of franchising being a fast food domain is rapidly disappearing, with only about a third of franchises in South Africa currently in this sector.
"Clearly franchising is gaining credibility as a vehicle for business growth and market penetration - and more and more men and women are being offered the opportunity of buying a franchise in areas where franchising was previously anathema," adds Shapiro.
Shapiro, head of franchise consulting at Ernst & Young, is also actively involved in the Entrepreneur of the Year programme, sponsored by Business Times Money, Ernst & Young, the SBDC, Sanlam and Trustbank
Re/Max Southern Africa, the local real estate franchise of Re/Max International Inc, is one franchiser which illustrates Shapiro's point. It has about 2 800 offices and 47 000 agents in 21 countries, and was one of the finalists at Fasa's 1997 awards for excellence.
In the past two years Re/Max Southern Africa has opened 63 real estate franchised offices throughout South Africa with projected sales in 1997 of about R1.3-billion. This makes it the fastest-growing group in the Re/Max international fold.
Re/Max CEO Peter Gilmour says that in South Africa the group has recorded twice the growth in franchises and agents predicted in its original business plan.
In southern Africa as a whole the group is, on average, opening two new franchises a month.
"Growth for its own sake is not the objective, however. Our aim is to build a team of high-calibre people offering outstanding service to buyers and sellers," says Gilmour.
He says the company's agents tend to be the entrepreneurial type, with the desire to be in business for themselves - but not by themselves.
"We allow agents to do what they do best - list and sell property and to earn what they deserve to earn," he adds.
"Our top agents report that they are controlling their expenses well and are taking home more than 85% of the gross commission they earn after paying all costs and expenses of running their business."
The Re/Max maximum commission system, says Gilmour, is designed to attract the top producing agent.
"Each agent is personally vested in the properties they sell, encouraging correct pricing, marketing and servicing of buyers' and sellers' needs."