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Real Estate Maximums, also known as RE/Max, is an American real estate company. Re/Max operates through a franchise system. Recently, with the monumental acquisition by RE/MAX, LLC with the purchase of the North American regions of RE/MAX INTEGRA, they added more than 500 franchisees in the first half of 2021. RE/MAX has more than 100,000 agents in 7000 offices. RE/MAX is known worldwide and operates in about 100 countries.
Denver-based Company RE/MAX was established in January 1973 by Dave Liniger and Gail Main. They started this company with the principle that agents keep nearly all the commission and only pay for the office expenses to brokers.
The first Re/Max franchisee was set up in Kansas City, Missouri, in 1975. This maximum commission concept made this company a hit. It had around 200 franchisees within the four years of its establishment and has increased exponentially since then. In 2006, Re/Max created their online presence and listed all the homes in the U.S. on their official website for sale.
Re/Max became a renowned real estate company with its extensive advertising and marketing techniques. Their hot air balloon logo made it a more prominent brand. Introduced at the Albuquerque Balloon Fiesta in 1978, it was part of their successful “Above the Crowd” campaign.
Buying Re/Max franchise looks like a profitable deal, but is it?
Buying Re/Max franchise might look like a way to a successful real estate career. But it is not that simple. Just because you will get the brand name does not mean it will get you the profits too.
We have researched all about Re/Max market trends, company policies, and franchises to determine how profitable it can be for you. So, let’s go through the shortcomings and see why it is not beneficial to buy Re/Max franchise.
Reasons Why Not To Buy The Re/Max Franchise
Buying a franchise is a sturdy financial commitment, and the brand which were profitable earlier or is paying does not mean it will give you profits in the future. Here are the main disadvantages of buying the Re/Max franchise;
#1 Franchise Renew Cost is too heavy
Buying a Re/Max franchise requires a lot of investment. Many new franchisees face many hardships in making a profit, paying taxes, and performing administrative tasks.
The investment required for setting up a Re/Max franchise is as follows:
- Initial Investment: $42,000-$284,000
- Initial Franchise Fee: $17,500-$37,500
- Advertising Fee: varies
It’s important to note that 100% of the initial franchise fee would also be payable as renewable fees every five years.
The franchise setting up cost is too high, and the return on investment is not that great. Renewal fees every five years are also a big turndown. Already the profits are to a bare minimum, and renewing fees make them thinner.
#2 Return On Investment Is Not Good
Compared to the national average, RE/MAX franchise owners earn 18% around $50,000 annually or $24 per hour. This return is a far-fetched profit for a new franchise. Setting up a franchise with such a low return on investment may not be worth the risk.
#3 Allegations Against Re/Max Is Bad For Its Reputation
Re/Max is facing many allegations from its franchisees, who complain that Re/Max has misled them and caused enormous losses for them. In evidence of many cases, it is now a well-known fact that Remax has less compassion towards the franchise owner and takes some harsh steps when the Franchisees differ from their business practices or agendas. However, claims like unfair advancement, deceit, Fraud in the agreement are startling and certainly deteriorating Re/Max’s reputation.
#4 Effects Of Pandemic On Real Estate
Real estate is a sector in which lockdown had a brutal impact and is still in the phase of recovery. Working from home, commuting time, and life events all affect home buyers’ decisions. People had to vacate their offices and apartments because of mortgages and could not buy a new one. People are still dealing with financial issues and are yet not fully ready to invest in properties. All the existing franchisees are having a tough time getting back to the business. Let alone setting up a new franchise and getting profits out of it is something not feasible.
#5 Relationships With Its Franchisees
Franchisee owners of Re/Max are not happy with the company policies and its relationship. RE/Max is not giving them the profits they expected. And in this era of advanced technology, Re/Max is somewhere lagging from other real estate companies like Forest City Enterprises, Team One, Samson, Berkshire Hathaway, and Howard Hughes Corporation. It is not just the franchisee owners losing the trust in the company; it is also the clients. Many new real estate companies and local real estate agents can work on less commission than Re/Max.
To become a Re/Max franchise is a hefty financial commitment, but at the same time, you also enjoy the benefits that include:
- You get instant acceptance as you are a franchisee of a leading Real estate company.
- You are associated with a dominant and renowned world corporate leader.
- Re/Max has over 48 years of industry acknowledgment and success.
- You get an already tried and tested result-oriented model.
Conclusion
Re/Max is a prime real estate company, and associating its name with your business can benefit your business. But it is not worth the price because the return on investment is not that good, and with time Re/Max is losing its impact on the market. Investing in a Re/ Max franchise is a huge decision and should be made after carefully considering the company’s reputation in your area, its relationship with other franchisees, allegations they are facing, and much more.
Source:
https://www.careerbliss.com/remax/salaries/franchise-owner/