Investing In A Lettings Agency Franchise? 7 Questions You Must Ask

Booming property sales and a thriving private lettings market are attracting new businesses into the sector on a regular basis, some of which are franchisors. While most franchisors enter the market through a tried and tested route, some sadly regard it as an easy way to make money by having other people pay them to promote their brand.

All too often, the result is that franchisees invest their hard earned money in a brand that later fails. How do you as a potential franchisee, learn to differentiate between ethical and unethical brands?

The following questions may help:-

What experience do you have in this sector?

A new franchisor doesn’t mean an unethical franchisor; all franchisors have to start somewhere. What is really important is the previous experience the franchisor has in the sector and whether or not they are running a successful pilot operation.  Redstones was launched by owner Manjit Virdi in 2003 but it wasn’t until 2010 following the opening of their first high street outlet that the Redstones franchise brand was formally launched. This approach gave Manjit time to prove that his business model would prove successful over a sustained period of time.

Which industry bodies are you a member of?

The lettings sector is unregulated but a reputable lettings agent should be a member of recognised industry bodies such as ARLA (The Association of Residential Lettings Agents) and NAEA (National Association of Estates Agents) as well as the DPS (Deposit Protection Service), to protect tenants’ deposits.

How do you market your brand?

Gone are the days of simply placing a For Sale or To Let board outside a property in the hope that a prospective buyer or tenant will walk through the door.  Marketing requires a sustained and comprehensive effort and is influenced significantly by an online presence.  Redstones offers a state of the art marketing strategy to support all of its franchisees.

Can I have a list of your franchisees to contact?

If you are provided only with a selective list or none at all, consider it an enormous red flag. Franchisors with nothing to hide will offer you the contact details of all of their franchisees to allow you to choose who to contact. A new franchisor should at the very least operate a successful pilot operation.

What does the franchise fee include?

The franchisor should be transparent about the total investment required to launch your lettings franchise. A turnkey package with Redstones requires a total investment of between £20-25,000, including a franchise fee of £11,995.

How do you keep up-to-date with changes in industry laws?

At present the lettings agency is unregulated but landlords are still required to comply with a number of rules and regulations.  The Immigration Act to be introduced in October 2014 is a prime example of this. Reputable lettings franchisors should have systems in place to ensure all of their franchisees are continually updated with vital changes in legal requirements. The lettings and estate agency sectors are fraught with potential issues for business owners.

Are you members of the British Franchise Association (BFA)?

As a self-regulated industry body the BFA aims to promote and uphold standards of excellence in franchising. Unethical franchisors are generally not members of the BFA as they often experience high levels of disputes or failures among their franchisees. All too often they will not meet the minimum requirements for ethical franchising.

When choosing a franchisor due diligence is essential. Don’t be caught out, investing in a franchise is a life-changing decision.  To find out what it means to be part of a reputable franchise brand, contact Redstones today. You can also find out what our franchisees think about us in the video below.