Franchises have flourished for many years by providing services, training and best practices for brokerages that their owners didn't feel they could manage on their own. And, there's no arguing with the growth of these franchises. They've become behemoths in the industry. However, even these franchises are struggling these days. Their cost to get started and their cut off the top of brokerage commissions makes them pretty expensive.
Franchise operations strive to increase their value in relation to cost by adding "services" and training, particularly in technology and the Internet these days. They create a massive website at the national level, market it extensively, and funnel leads from the top down to the local brokerage members. Those leads are then doled out to the individual agents in most cases.
If an agent works out and generates business, it's considered far more likely that they'll stay if they're dependent upon the services, technology and training provided by the franchise through the brokerage. And, of course leads they get from the top don't hurt either. Again, there's a price to pay for this stuff, that pesky franchise percentage.
I would like to propose an alternative approach for the independent brokerage considering whether to franchise or not or how to grow on their own. This approach would not have been possible five or more years ago. As technology has progressed, services and resources only available for the deep pocket players years ago are now free or very affordable in many cases. So, the independent brokerage can provide a suite of services any agent would find very valuable.
The first inclination of the enterprising broker then could be to set up their services and business model to mimic that dependency structure of the franchise. That's not a bad thing, but I would suggest modifying it a bit. While you can create a relationship that builds trust and loyalty with your agents, you should also develop their entrepreneurial talents and desires as well. The more you make them feel and act like the independent contractors they are, the better they'll do at generating business.
The trick is to create a suite of business services and a culture that brings value to the agent in excess of the costs they pay. If they always perceive great value at an affordable cost, they'll be far less likely to jump ship to another brokerage or start their own. Never before has this been as achievable as it is with today's technology. Let's take a look at specific tools and resources that can help an independent broker to build a team of agents, cut turnover, increase their business generation, and even change to commission split to their benefit.