To Franchise or Not To Franchise: It’s Really Not a Question
RHODE ISLAND BUSINESS SPOTLIGHT:
Dean deTonnancourt of HomeSmart Professionals
Nexus Property Management™ General Manager, Greg Rice, had the pleasure of sitting down to discuss the importance of a brand with HomeSmart Professionals Real Estate President and CEO Dean deTonnancourt. HomeSmart is “The Fastest Growing Real Estate Franchise in the Nation” with almost 20,000 agents spread across 30 states. But when DeTonnancourt bought into the franchise six years ago and brought it to Rhode Island, the closest office was all the way in Chicago! Practicing real estate since 1989, Dean is consistently identified as one of the top agents in the state in listings and sales. Prior to bringing HomeSmart to the East Coast (there are now offices in 14 states east of Illinois), DeTonnancourt also opened and operated the first Keller Williams Realty in Rhode Island back in 2000. Last year he served as the President of the Rhode Island Association of Realtors. With such a long and prosperous career in real estate and with experience opening and leading two major real estate franchises, Dean was the perfect expert to help Greg drill down on the Power of the Franchise.
BE MORE INDEPENDENT BY WORKING WITH SOMEONE
When setting out to create your own business there are so many variables to consider and tackle. Undoubtedly you’ve got passion for what you do because you’re taking huge steps in following your ambition. With this in mind, so many entrepreneurs think that going it alone is the only way to truly honor their vision and independence. This logic makes sense, but it’s flawed because so much of your time and effort in building the company will be put toward tasks that are necessary hardships and hurdles in building a business. They will have little to do with your main objectives and vision. For DeTonnancourt with his passion for real estate, it was website design, choosing email servers, software programs, customer relationship management (CRMs) systems...all things that a 21st century business needs to do well to thrive and will surely drown without, that loomed and helped him decide not to try his hand as an independent broker; not because he couldn’t do it, but because it was inefficient and incompatible to his expertise to do so. “What I do best is real estate and I was actually selling at that time, 60 homes in a year.” With a franchise in your corner, you can most effectively build something new on top of your best skills and abilities.
During this interview, DeTonnancourt touches on the value he has gained from his experience as a franchisee. HomeSmart Professionals Real Estate, the Rhode Island chapter of HomeSmart International that he began six years ago, has already grown to 270 agents and three offices across the state. The success they’ve had out of the gate and their ability to scale is unquestionable. The entire interview is well worth watching in its entirety as Dean is well versed in all things real estate, but if you had to simplify and pull one theme from DeTonnancourt’s account it’d be this: There are two main benefits that you get from joining a franchise that are impossible to create on day one by yourself: the Power of the Brand and having Systems In Place.
POWER OF THE BRAND:
From day one selling houses for Century 21, deTonnancourt has always been associated with franchises. “I’ve always been part of a brand...I believe in a brand”. He continues, “There’s power behind something larger than yourself”. To start a new business and instantly have name recognition is an unspeakably huge advantage. This is the road Dean took when he opened a Keller Williams franchise. Keller Williams was well known and trusted and it gave Dean and his team instant legitimacy when they opened their doors. Additionally, franchisors are trusting you with their brand and good name. With that trust comes all the necessary training and the best practices they’ve developed over the years. They are investing in your success because you are now carrying that brand name torch. This worked a little differently when deTonnancourt brought HomeSmart to the OceanState. No one around here knew HomeSmart...but people knew Dean deTonnancourt. Even in this atypical setup, it’s all about the trust that’s built up around the name.
SYSTEMS IN PLACE:
In addition to instant name recognition, working within a franchise provides you with systems that would otherwise consume most of your time in creating. As Dean explained to Greg, it comes down to simply plugging in versus customizing and shopping. When the goal is to “focus on helping others sell real estate”, or whatever it is you might be selling or producing, none of us want to be working our tails off to figure out something that someone else is already doing efficiently. We want to innovate and build upon what the industry has already figured out. We can “only do that with systems in place”.
I want to coach, I want to mentor, I want to assist...real estate tools have already been invented, it’s just a matter of which ones you want to use...with HomeSmart I could plug in and utilize their systems.
And with systems in place comes efficiency. With efficiency comes the opportunity for exponential growth. Without that brand, that franchise, business owners would “spend more time customizing and still shopping systems”. In addition, and just as important, to cover for inefficiencies and the time going toward creating your own systems, you’d likely have to increase your fee structure which means more expenses for your consumers. This is a big problem no matter your industry, but for Dean, it was multiplied by the fact that in all reality his is a business services company in that he supports individuals who really have their own individual businesses under his HomeSmart umbrella. So without systems in place, he’d have to increase fees for his agents. Without systems in place, his agents could probably keep more of their hard earned money elsewhere.
There are positives and negatives to everything and buying a franchise is no different. What it is you want to do in your business will be a huge variable. Be sure to do your research and look into who is doing something similar to see if they might be able to jumpstart your success or maybe even to find opportunities that they might be missing. Odds are good that someone out there is doing it right and building a relationship with them could be extremely valuable. There are a couple potential thorns that could come with a franchise if you don’t do the proper homework upfront:
For DeTonnancourt, who spent plenty of time digging in and sizing up his options, he needed to work hard to ensure that he wouldn’t create unnecessary internal competition. It’s easy to picture a city in New England with two Dunkin Donuts’ within a mile of each other. This can make things pretty tricky as an owner. Similarly, if you are in a situation where there may be oversaturation, your reputation is likely only as good as the weakest franchise in the area. Nobody knows that you, as the owner, aren’t affiliated with your neighbors who might not be as efficient or reliable as you are. Dean’s move was to buy into a large territory, in this case the entire state of Rhode Island to ensure he and his team could properly control the message and their reputation.
The other reality is that as a franchisee there are fees that you’ll need to pay to the franchisor. Again, this is why you want to do your research and find the best fit. Very often, fees are tied to technology and systems that are integral to your success in the 21st century. They’re often paid toward software and advertising that would be far more expensive if you were to go it alone, rather than as part of a large network that receives lower prices due to large size. The wise businessperson sees these fees as an investment, provided the franchise they buy into “wants to grow and wants you to grow with them”, as HomeSmart did for DeTonnancourt.
A study by the International Franchise Association (IFA) suggests that about 95% of franchises are still in business after 5 years compared to the US Bureau of Labor Statistics and the US Small Business Administration found that number to be closer to 50% for independent start-ups.
The secret to growth is scalability. Many of us can create something great by repeatedly learning from mistakes or opportunities as we go. We can motivate ourselves to create best practices and much of what we do becomes second nature. But can you easily transfer your expertise to someone else, or to a large team? Can the successful way you run your business be duplicated and duplicated again by someone other than yourself? That is the true challenge when it comes to growth and it’s exactly why exploring a franchise makes a lot of sense. Like any intelligent entrepreneur, continue to do your research.
If you’d like to hear more from Dean deTonnancourt be sure to watch the full length interview. You can find Dean and his HomeSmart team at 100 Quaker Lane in Warwick, RI and at TheRhodeHome.com. For more information on franchising and/or franchise opportunities with Nexus Property Management™, contact Nexus or Vice President of Sales, Gregory Rice.
Mick Lefort is the Vice President of Operations for Nexus Property Management™. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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