Boutique vs Franchise Brokerages

If I were to ask you who is the McDonald’s of real estate, what company comes to mind?  Great, I agree!  There is no right or wrong answer, other than the answer that comes to mind.

When it comes to real estate, the appeal of brand recognition can sometimes distract from essential considerations when choosing a licensee to represent your interests effectively. If you're unsure about the unique value proposition of the licensee or brokerage you've interviewed, whether it's boutique or franchised, you might not be making a fully informed decision. Asking yourself if there's something you might be overlooking can be the key to making the best choice for yourself.

Key takeaways:

• Brand Recognition Isn't Everything: Don't rely solely on brand recognition when choosing a real estate licensee. Different brokerages, even within franchises, can offer vastly different experiences and outcomes.
• Franchise Differences: Real estate franchises differ significantly from other franchise businesses. While they provide systems and processes to agents, the customer experience can vary widely.
• Agent Variability: Even within the same franchise brokerage, clients may experience different outcomes due to varying skill sets and experiences among agents.
• Similarities: Both boutique and franchise brokerages share similarities in terms of oversight, licensing requirements, market knowledge, standards, legal obligations, and tools usage.
• Advantages of Boutiques: Boutique brokerages may offer a more personalized approach, greater flexibility, and a unique atmosphere that fosters closer relationships between agents and clients. Consider these benefits when selecting a brokerage that suits your needs. 

If you’re signing an agency contract with a real estate licensee with brand recognition as a key part of your decision making, you could be making a mistake!

This isn’t a blog post that’s going to trash franchised real estate brokerages.  After all, a big chunk of my career was spent with the largest residential real estate brokerage by sales production and agent count in Chester County, which of course happened to be a franchise.  

My intent is only to educate people that real estate franchises are vastly different from other franchised businesses, like restaurants.  Sure, the Restaurant and Real Estate franchisors share similarities in the sense that both provide systems and processes to the franchisees, but the things that are provided to the customer or client can be totally different. 

You see, if you as a consumer go to a McDonald’s in California, it’s not going to be a whole lot different than a McDonald’s here in Pennsylvania.  That’s because the consistency of quality control is supposed to flow through to the customer. 

However, if you go to two real estate agents from the same franchise office here in Pennsylvania, you’re likely to get two totally different approaches and outcomes. That’s because the systems and processes delivered to the real estate franchisees are for their customers . . . THE REAL ESTATE AGENTS! Although some of these systems and processes are designed to equip the agents with the knowledge and skills they need to help their clients, one of the main focuses of the franchisee is to recruit, attract and retain as many licensees as possible. For that reason, the experience of the clients of each individual licensee varies from agent to agent, even within the same real estate brokerage.

Just like any career, people-are-people and we all possess different skill-sets, characteristics and experiences. Or more importantly two totally different levels of skill-sets and competencies. Perfect example is one agent may have 10 days of experience, whereas another may have 10 years of experience. The point being that not all practitioners are equal in ability and knowledge.   

The fact of the matter is, that we, boutique brokerages and franchise brokerages, in a lot of ways are more alike than different.

SIMILARITIES: 

• Broker of Record oversees : In Pennsylvania, a Broker of Record is responsible for supervising real estate activities, ensuring compliance with laws and ethical standards, managing risks, training agents, representing the brokerage, maintaining records, and making key business decisions for the firm. They play a crucial role in ensuring the integrity and success of the brokerage. As you may imagine, the larger the brokerage, the less oversight the Broker of Record has over their agents and the thinner that person is spread over all of the previously mentioned responsibilities.
• Independent Contractors: Generally speaking, most of the licensees within a real estate brokerage, whether it be a boutique or franchise, are independent contractors.  Which means the licensees are typically self-employed, therefore the franchise doesn’t oversee their work as if they were a traditional employee.   
• Licensing and Regulation: Both boutique and national franchise brokerages are subject to the same licensing and regulatory requirements in their respective jurisdictions.
• Real Estate Market Knowledge: Agents at both types of brokerages are expected to be knowledgeable about their local real estate markets and are able to provide guidance to clients.
• Professional Standards: Agents at both types of brokerages are held to the same professional standards and codes of ethics, especially if they’re a REALTOR®
• Legal Obligations: Both boutique and national franchise brokerages have legal obligations to their clients, not limited to, but including fiduciary duties and the duty to disclose material facts.
• Marketing and Advertising: Both types of brokerages may use similar marketing and advertising strategies to promote their listings and attract buyers.
• Negotiation Skills: Although not always the case, agents at both types of brokerages are expected to be skilled negotiators and should be able to negotiate favorable terms for their clients.
• Technology and Tools: Both types of brokerages may use the same, or similar technology and tools to assist their agents and clients in their day-to-day activities.
• Continuing Education: Agents at both types of brokerages are required to complete continuing education courses to maintain their licenses and stay up-to-date with industry trends and best practices.

While both boutique and national franchise brokerages share similarities, there are distinct advantages to choosing a boutique brokerage. These include a more personalized approach, greater flexibility, and a unique atmosphere that fosters closer relationships between agents and clients. Prospective clients are encouraged to weigh these benefits when deciding which brokerage aligns best with their needs and preferences.