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Century 21 Real Estate LLC is a renowned American real estate agent franchise company. Founded in 1971, this company has changed and evolved for the better. It has become a prominent name in the market, with more than 14,000 franchised brokers working independently in 86 countries and territories worldwide with over 147,000 sales professionals.
They started giving franchises in 1972, a year after they found the company. Century 21 offers the franchise to people who are already an owner of a real estate business. In a few cases, they also offer franchises to newly opened real estate businesses. The franchisor operates as a subsidiary of Realogy Group and Realogy Holdings.
Century 21 has become a big shot with its effective marketing and branding campaigns. They help people sell their houses or buy a new house/property. They connect the client with an appropriate agent who will help them achieve their goal of buying or selling their property at the correct prices.
Century 21 makes real estate look easy and profitable. They make it look like buying their franchise will get you all set for the real estate brokerages. But in contrast, it is not that easy to run a real estate business. And just because you are getting their brand name does not make it a sure method to have a profitable business. That is why before buying the franchise, go through all the disadvantages and risks of buying it. Do not take any step without careful consideration of all the aspects. In this blog, we will put forward some reasons you should not buy the Century 21 franchise.
Reasons Why Not To Buy The Century 21 Franchise
There are many benefits of buying the Century 21 franchise. This brand has created a reputation and trust in the market. But nothing is always all good; there are always certain drawbacks. Century 21 franchise also has a few drawbacks that you should consider before indulging in business with them.
We have researched all about Century 21 market trends, company policies, and franchises to determine how profitable it can be for you. So, let’s go through the shortcomings and decide if it is beneficial to buy the franchise or not.
#1 Initial Franchise Investment Cost is too heavy As Compared to Profits
Setting up a Century 21 franchise could be burdensome to your pockets. Many new franchisees face vital challenges in raising capital, getting profit, paying taxes, and administrative tasks.
The initial investment for setting up a Century 21 franchise is as follows:
- Initial Franchise Fee: $25,000
- Total Investment: $106,200 to $454,350
- Working Capital: $50,000 to $100,000
- Royalty Fee: 6.0%
To invest in Century 21, you have to pay a franchise fee of up to $25,000, with a total initial investment range of $106,200 to $454,350. The profit of the franchise owner depends on the location, labor cost, demand, commercial lease rate, and several other factors. The Century 21 franchise owner in the United States makes around $75,000 to $125,000 a year, which yields a low ROI compared to the setting up cost of the franchise. It is precarious to gain profit in the starting few years if your franchise does not perform extraordinarily.
#2 Lawsuit Charges Against Century 21 is Bad for its Reputation
Century 21 is facing legal allegations and charges from real estate developer Ben Ashkenazy. Ben says that they have misled them and caused enormous losses for them. Century 21 franchise is also facing legal allegations from housing groups. The lawsuit alleges that Century 21 Town & Country real estate agents are engaged in unlawful racial steering by showing potential black homebuyers’ homes in primarily black neighborhoods and potential white homebuyers’ homes in predominantly white communities. However, claims like racial discrimination, deceit are harming the reputation of Century 21 in certain areas.
#3 Real Estate Industry Have to Face Pandemic Effects
Pandemic has hit very hard to all the businesses and has created an economic crisis worldwide. Other than food and pharmaceuticals, no other sector was able to survive this pandemic. One of the sectors whose performance got depleted during the pandemic was real estate. In the lockdown, many people have vacated their offices and stores because of mortgages and are in no condition to buy new properties. It has been very tough since then to get back on track for all the Century 21 franchises. And as a new franchisee bringing the client back is going to be strenuous.
#4 Extensive Training Session Takes Lot of Time
Century 21 trains you on how to run a franchise successfully with their training programs. They have training programs for everyone, be it brokers, managers, and affiliated sales associates. There are multiple ways to take the training like video sessions, live-online, live-classroom, social network groups, self-paced courses, hands-on technology labs, and more. They teach every aspect of real estate brokerage and client service. But this training session at the same time is also time exhaustive. Training session prolongs the starting up of the new location, which also frustrates the franchise owner.
To become a Century 21 franchisee is a significant commitment, but at the same time, you also enjoy the benefits that include:
- You get instant recognition and trust from your clients when you are a franchise of Century 21.
- You are associated with a stable and renowned world corporate leader.
- Century 21 has over 50 years of industry recognition and achievement.
- You get an already tried and tested result-oriented model.
On Final Note
Century 21 is a well-established name in the real estate market, and buying its franchise can be good for your business career. But before making such a big decision consider all the aspects like lawsuits against them, initial investment it requires, the effect of the pandemic on the sector, reputation of the brand in your area.
Buying a franchise is a risky investment, and it requires much capital to start. Think precisely and give a thought to all the information mentioned above before reaching any decision.
Sources:
https://www.business-humanrights.org/en/latest-news/housing-group-sues-century-21-usa/
https://en.wikipedia.org/wiki/Century_21_Real_Estate
https://www.century21.com/about-us/about/faqs/careers-and-franchises