How much does it cost to buy a real estate franchise to enter the SA real estate market
Photo by Towfiqu barbhuiya on Unsplash.
- Almost all major real estate agencies in South Africa operate under franchise models.
- This means you can purchase a branded, turnkey real estate business and benefit from ongoing marketing and head office support.
- But several companies compete fiercely in this industry, and most won’t disclose their total financial commitments until you’ve declared an interest and signed an NDA.
- Here are some real estate franchises that disclose fees, which range between R500,000 and R1.2 million.
- For more stories go to www.BusinessInsider.co.za.
Covid-19 threw some curveballs at the South African property market but bounced back to experience unprecedented activity levels in 2022.
It is possible to exploit this as a real estate agent by earning commissions on sales. But if you have deep pockets and an entrepreneurial spirit, it’s also possible to purchase a turnkey real estate franchise from several top brands.
Most of the known real 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 different levels of support. And at the heart of a franchise’s appeal is an established, recognizable brand backed by good websites and advanced SEO services.
These estate agent franchises in South Africa will likely cost more than starting your independent venture from scratch, but it does limit some risk and guide you through the process.
How much help you will receive as a franchisee and how much you will have to pay depends on the company you are buying from. It’s also essential to research the business – and accurately determine the size of your business footprint.
Although most estate agencies in South Africa operate on a franchise model, many hide the financial commitments behind the NDA and other restrictions. Others, like the ones below, are happy to share a few details about their franchise models and cost structures.
Here is how much it costs to buy a real estate agent franchise in South Africa:
Properties of Jawitz
Jawitz Properties has over 50 years of experience in the real estate industry. They offer training, real estate sales technology and social media support, business development support and a referral system. They seek franchisees with interpersonal skills and a passion for the real estate industry and sell franchises throughout South Africa and several neighboring countries.
Jawitz Properties Costs: Jawitz charges an upfront fee of 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 total development costs to be around R1.2 million. They also charge a running fee of 8% of revenue, which they split between advertising, marketing, and management.
Fair ownership group
Just Property Group has been present in South Africa for over 20 years. During this period, they have built an extensive network of 122 franchises and 88 physical branches across the country. A head office team of 21 supports franchisees in finance, marketing, learning and development, as well as various operational and technology functions.
Just Property Group costs: Just Property charges an establishment cost of R250,000 and estimates the total investment amount at 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 claims to have developed a “distinctive, unique and robust business format” that provides homeowners with tools to sell their own home and pay a fixed rate rather than a percentage of their property’s value. They sell franchises which allow franchisees to list properties in specific areas and help with most aspects of set-up and ongoing operations.
PropertyGuys.com costs: Franchisees must pay an initial fee of R250,000 and an establishment cost of R100,000-150,000. They also recommend a working capital of R150,000 and expect the total investment not to exceed R650,000. They charge an ongoing fee of around R206,000 per year, which includes an advertising contribution and royalties of 7% of gross revenue.
RE/MAX is a US-founded company that has 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 over 2,500 agents working from 160 offices.
RE/MAX costs: RE/MAX does not publicly disclose full costs, but indicates that they are available upon request 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.