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How much it costs to buy an estate agency franchise to tap into SA’s property market

Source: Business Insider SA, 10/11/2022

Almost all leading estate agencies in South Africa operate off franchise models.
This means you can buy a brand-name turnkey property business and benefit from ongoing marketing and head office support.
But several companies fiercely compete in this sector, and most don`t disclose total financial commitments until you`ve declared an interest and signed an NDA.
Here are some property franchises that do disclose fees, which range between R500,000 and R1.2million.
Covid-19 threw a few curveballs into South Africa`s property market but rebounded to experience unprecedented activity levels in 2022.

It`s possible to tap into this as an estate agent by earning commissions on sales. But if you have deep pockets and an entrepreneurial spirit, it`s also possible to buy a turnkey real estate franchise from several leading brands.
Most household-name estate agencies like RE/MAX, Rawson, Pam Golding, Jawitz, and Just Property operate as franchises in South Africa. They sell the rights to specific regions to franchisees and offer varying levels of support. And central to the appeal of a franchise is a recognisable, established brand backed up by good websites and advanced listing services.

These estate agent franchises in South Africa will likely cost more than starting your independent initiative from scratch, but it limits some risks and guides you through the process.

How much assistance you`ll receive as a franchisee and how much you`ll have to pay depends on the company you buy into. It`s also essential to research the company - and to ascertain precisely how big your sales footprint will be.

Although most estate agencies in South Africa operate on a franchise model, many hide the financial commitments behind NDA and other restrictions. Others, like those below, are happy to share some details of their models and franchise cost structures.

Here`s how much it costs to buy an estate agent property franchise in South Africa:

Jawitz Properties

Jawitz Properties has more than 50 years of experience in the property industry. They offer training, property sales technology and social media assistance, business development support, and a referral system. They`re looking for franchisees with interpersonal skills and a passion for the property industry and are selling franchises throughout South Africa and in several neighbouring countries.

Jawitz Properties costs: Jawitz charges an upfront fee between R30,000 and R200,000, depending on the size and location of the franchisee`s area. They require working capital of between R600,000 and R1 million and expect the total development costs to be about R1.2 million. They also charge ongoing fees of 8% of turnover, which they split between advertising, marketing, and management.

Just Property Group

Just Property Group has been in South Africa for more than 20 years. Over this time, they`ve built an extensive network of 122 franchises and 88 physical branches throughout the country. A head office team of 21 supports franchisees with finance, marketing, learning and development, and various operations and technology functions.

Just Property Group costs: Just Property charges a R250,000 establishment cost and estimates the total investment amount to be R500,000. They also require franchisees to have R500,000 in working capital and charge 8% monthly turnover for advertising, marketing, and management.

PropertyGuys.com

PropertyGuys.com claims to have developed a `distinctive, unique and sound business format` that provides homeowners with tools to sell their own homes and pay a fixed rate rather than a percentage of their property`s value. They are selling franchises that allow franchisees rights to list properties in specific areas and assist with most aspects of set-up and ongoing operations.

PropertyGuys.com costs: Franchisees must pay an upfront fee of R250,000 and an establishment cost of R100,000 to R150,000. They also recommend a working capital of R150,000 and expect the total investment to be no more than R650,000. They charge ongoing fees of approximately R206,000 per year, which includes an advertising contribution, and royalties of 7% of gross revenue.

RE/MAX

RE/MAX is a US-founded company that`s grown to become a global leader in the real estate industry. They currently have 130,000 agents based in 110 countries, of which South Africa is one. The local branch opened here in 1994 and has more than 2,500 agents working from 160 offices.

RE/MAX costs: RE/MAX does not publicly disclose full costings but says these are available upon application and depending on the licensed area. They charge 1.5% of turnover as a management fee and a national marketing fee of R660 per person, among others.

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