Real Estate Franchise

Washington, D.C., Real Estate Franchise Lawyer

Despite the recent downturn in the real estate market, real estate franchises remain a thriving business. Agents and brokers can affiliate with franchises in almost any state and gain the security of a large corporation. As an experienced real estate franchisee attorney, we help people interested in joining franchises.

Are you a broker considering a real estate franchise? Please contact us, Mario L Herman and Gregory O Herman, to schedule an initial consultation.

We help clients understand and capitalize upon their real estate franchisee opportunities, including:

Affiliating with a realtor company
Bringing an overseas franchise into the U.S.
Selling a franchise
And more

Are You a Prospective Real Estate Franchisee?

Before buying into or affiliating yourself with a real estate franchise, there are some important issues to consider. What are your responsibilities under the franchise contract? Do you need to sign a non-compete agreement? How much freedom do you have to market your franchise? Are you required to sell a certain number of homes or commercial properties? We help prospective real estate franchisees answer these important questions and address any other issues that may arise during the process.

Why Join a Real Estate Franchise?

For an agent or broker, joining a real estate franchise means trading some independence for the backing of an established brand. A franchise can offer instant name recognition, a proven business model, training and coaching, marketing support, technology and lead-generation tools, and a referral network that spans other offices. For many brokers, that support is worth the fees. Others prefer the freedom of an independent brokerage, where they keep full control of their brand but take on every cost and decision themselves. The right choice depends on your market, your budget, and how much you value the franchisor’s systems and reputation.

What a Real Estate Franchise Agreement Covers

The franchise agreement is the contract that defines your relationship with the franchisor. For a real estate franchise, it typically addresses the key terms that govern your rights and obligations. It typically covers:

The initial franchise fee and the ongoing royalty and marketing fees.
The territory you are granted and whether it is exclusive.
The length of the agreement and the renewal terms.
Brand standards, required technology, and use of the franchisor’s trademarks.
Any minimum production or recruitment requirements.
Non-compete and confidentiality obligations.
Transfer rights and the grounds for termination.

Because these terms bind you for years, it is worth having an attorney review the agreement before you sign.

Costs and Investment

The cost of a real estate franchise varies widely from one brand to the next, but most involve the same categories of expense.

Initial franchise fee.
Ongoing royalty.
Marketing or advertising fee.
Ongoing costs, including technology platforms, errors-and-omissions insurance, office space, and staff.

Because fee structures differ so much, the franchise disclosure document is the place to confirm the exact numbers for any brand you are considering.

A Real Estate Franchisee’s Responsibilities

Signing with a real estate franchise comes with ongoing obligations. As a franchisee, you are generally responsible for:

Paying the franchise fee, royalties, and marketing contributions on time.
Following the franchisor’s brand standards, systems, and technology requirements.
Meeting any minimum production or agent-recruitment targets in your agreement.
Recruiting, training, and supervising your agents in line with the brand.
Maintaining the licenses and insurance your state and the franchisor require.
Honoring non-compete and confidentiality terms during and after the agreement.

Falling short on these obligations can put your franchise, and your investment, at risk.

The Process of Buying a Real Estate Franchise

Buying into a real estate franchise is a significant commitment, and the process usually follows a few stages:

Research your options. Compare brands on brand strength, fee structure, technology, and the support they offer.
Review the disclosure documents. Study the franchise disclosure document and the franchise agreement, ideally with an attorney.
Talk to current and former franchisees. Ask about costs, support, and whether they would buy in again.
Negotiate the terms. Some terms of a real estate franchise agreement can be negotiated before you sign.
Secure financing and licensing. Confirm you meet the net worth, liquidity, and broker-license requirements.
Sign and launch. Once the agreement is in place, you can open your office and begin building your team.

If you are buying an existing real estate franchise rather than opening a new one, there are additional legal issues to review before you take over.

Frequently Asked Questions

What is a real estate franchise?

A real estate franchise lets a broker or brokerage operate under an established brand in exchange for fees. The franchisee gets the brand name, systems, training, technology, and referral network, and agrees to follow the franchisor’s standards.

Is a real estate franchise worth it compared to an independent brokerage?

It depends on what you value. A franchise gives you brand recognition, proven systems, and support, but you pay for them and follow the franchisor’s rules. An independent brokerage costs less in fees and gives you full control, but you build everything yourself. Neither is right for everyone.

Do I need a broker’s license to own a real estate franchise?

Generally yes. Most real estate franchises require the owner to hold a broker’s license in the state, or to employ a managing broker who does. Licensing rules vary by state, so confirm the requirements where you plan to operate.

What should I look for in a real estate franchise agreement?

Pay close attention to the fees, the territory and whether it is exclusive, the length and renewal terms, any minimum production requirements, the non-compete, and the grounds for termination. These terms determine your costs and your freedom for years, so review them carefully before signing.

Do I need a lawyer to buy a real estate franchise?

You are not required to, but it is a wise step. A franchise agreement is a long-term, high-value contract written to protect the franchisor. An experienced franchise attorney can review the documents, explain your obligations, and help you negotiate before you commit.

Contact Experienced Real Estate Franchisee Attorneys

Franchise law is a complex legal area. Thus, if you are looking to buy into a real estate franchise or resolve a dispute, you will need an experienced franchise attorney to ensure your rights and best interests are fully protected. You also need a franchise attorney to advise you of your rights and responsibilities under U.S. franchise law.

We have more than thirty-five years of combined experience in domestic and international franchise law. You can count on us to provide informative and responsive legal counsel.