The spring homebuying season might have gotten off to a slower-than-expected start in many regions of the country, but franchisor Re/Max LLC grew its agent count, revenue and profits during the first three months of the year.
The Denver-based franchise giant said worldwide agent count jumped 4.9 percent from a year ago to 94,385 as of March 31, first-quarter revenue grew 7.2 percent, to $41.9 million, and profits were up 44.2 percent to $7.8 million.
Re/Max attributed the jump in revenue to its agent count growth and a $3-a-month increase in the fee it charges Re/Max-affiliated brokerages for every agent they employ (the fee is assessed to brokerages in the U.S. franchise regions it owns). The company also got a revenue boost by taking back ownership of its Southwest and Central Atlantic franchise regions, which it reacquired in October using funds from its $225 million initial public offering.
In its quarterly report to investors, Re/Max said its growth strategies include the following initiatives:
- Increase total agent count.
- Continue to drive franchise sales growth and agent recruitment and retention.
- Reacquire select Re/Max regional franchises in the U.S. and Canada.
- Increase franchise and agent fees.
A $10 increase brought annual dues for Re/Max-affiliated agents in the U.S. and Canada to $400, also contributing to revenue growth. The Re/Max agent count in the U.S. and Canada stood at 74,255 at the end of the first quarter.
A bulk of Re/Max’s revenue — 60.2 percent in the first quarter — comes from continuing franchise fees (the per-agent fees Re/Max charges its franchisees) and annual dues. That business model helps insulate the company from the ups and downs of the housing market.
“We continue to grow our agent-centric network and our recurring revenue streams, demonstrating the strength of our stable, fee-based franchise model,” said Margaret Kelly, CEO of Re/Max, in a statement. “While current indicators point to mixed trends in the housing market, we remain confident in our ability to leverage our resilient business model to grow our network of highly productive agents and drive margin expansion.”
The largest chunk of Re/Max’s first-quarter revenue, $17.7 million, or 42.2 percent, came from continuing franchise fees.
Franchise sales and other franchise revenue totaling $7.9 million accounted for the next-largest segment of Re/Max’s first-quarter revenue, followed by agent annual dues at $7.5 million, broker fees at $5.6 million and brokerage revenue at $3.2 million.