A 35-year-old Australian real estate franchise has launched a U.S. sister company with former Realty Executives International CEO Glenn Melton in a top management role.
Scottsdale, Ariz.-based Professionals Realty Group USA (ProsUSA) has signed its first brokerage — a former Realty Executives franchise in Escondido, Calif. — and lined up other "strong candidates" in Arizona, California, Colorado, Kansas, Missouri and Utah, Melton said.
Melton said ProsUSA is offering brokerages in all 50 states an advanced technology platform and protected territory for a flat fee that’s based on the number of homes in their market, rather than the transaction-based royalty employed by many franchisors.
"We know how much it costs to service and support a brokerage, and how much we need on top of that to cover overhead and earn a reasonable return on investment to the owners of the company — that’s how we construct our flat fee," Melton said.
Although ProsUSA is a brand new franchise, it can draw on the experience, technology and deep pockets of its sister company, Australia’s Professionals Real Estate Group, a franchise founded in 1976 by independent agents in Brisbane that’s since expanded to more than 350 offices in Australia, New Zealand, Indonesia, Thailand and New Guinea.
Melton, who is serving as the new franchisor’s president, said ProsUSA has a $3 million initial funding commitment from "a number of shareholders" based in Australia and the U.S.
Jeff Turner, founder of Real Estate Shows and President of Zeek Interactive, has been named to the ProsUSA board of directors.
Professionals Real Estate Group CEO Glyn Morgan said the long-term goal is not for ProsUSA to be the biggest or most profitable franchise in America, "but the best from a broker perspective. If that means 200 offices, or 400 offices, great, but it’s all about the members."
Morgan noted that Professionals just wrapped up its annual meeting in Australia, and 70 percent of members attended.
"That doesn’t happen in the U.S.," he said of competing franchisors. Professionals, Morgan said, is "about the culture, being the best value for the money you can get, and (being a) very strong brand."
He said 10 percent of ProsUSA profits will be earmarked for member brokers to spend as they see fit — to provide additional services or marketing that benefits franchise members, for example.
Melton said Morgan has been researching the U.S. market for five years, and "became aware that there is a big hole in the middle of the offering."
Traditional U.S. franchisors "offer a package of services at a very significant cost," Melton said. At the other end of the spectrum is "a reactive side of the business that’s a low-cost, low-content offering."
"What’s missing is the middle — a high-content but very affordable cost offering," Melton said. "It was (Morgan’s) belief that there would be an opportunity for the brand."
Melton said he and Morgan have known each other for about four years. When Realty Executives International’s largest brokerage, Phoenix-based Realty Executives Inc., laid Melton and other executives off in January, "all of a sudden (Professionals) had access to a complete team capable of opening and managing a franchise business that they already knew and trusted," Melton said.
Melton said ProsUSA will draw on the resources Professionals has to offer, such as its brand and technology, wherever there is convergence between the U.S. and Australian business models. Although the business of real estate is similar in many ways in both countries, there are no multiple listing services in Australia.
So while ProsUSA is tapping Professionals for customer relationship management (CRM) software, it’s adding its own lead-generation and management tools to drum up and manage business generated by the display of listings and other website content.
"We have the lead-generation capability to drive significant traffic to agent and broker websites," which the company will also offer to provide, Melton said.
ProsUSA offers websites based on WordPress3, making it easy for brokers and agents to create their own hyperlocal content.
"Or we have a publicist who writes location-specific material, and you can can pull their stuff into your blog," he said.
In addition to driving traffic to broker and agent sites, ProsUSA’s lead management software will maintain data on every search and inquiry made, cataloguing each by IP address to give agents and brokers insight into an individual user’s interests even before they become registered users.
ProsUSA has also partnered with one vendor, Virtual Agent, to provide "point of sale" technology to generate leads using QR codes ("quick response" codes can be scanned using smartphone cameras), text messaging and toll-free numbers on yard signs and other marketing materials.
The goal is to provide not just technology, but "but technology that’s user-friendly and can easily be employed to increase their income," Melton said. "We want a completely integrated approach so all the pieces work together," and so that agents aren’t spending too much time learning how to use the technology, he added.
Melton said all of the services ProsUSA provides to brokers are included in its flat fee. If agents want the same capabilities, he said, there is a subscription fee that varies by the size of the office.
He said ProsUSA has "moderate growth plans," adding that because the company is sufficiently capitalized it can be prudent about expanding.
Because ProsUSA has been founded "by brokers to serve brokers," he said, "our inclination is not to provide endless supply of shiny objects to make them feel they’re getting something for their money, but (to) ask, ‘What does a broker need (in terms of) coaching, training, and mentoring to be successful?’ and ‘What can we provide (to brokers)?’ "
Realty Executives franchise first to convert
Brian Williams, broker owner of Escondido-based Professionals Realty Group North County, joked, "I will either be a genius or a fool because I bought the first franchise," signing a 5-year agreement with ProsUSA on the strength of the company’s offerings and his previous experience with its managers.
"I had a 5-year history with Realty Executives, so I knew what they (the management team at ProsUSA) were all about," Williams said. "Frankly, when they left, things were not the same" at Realty Executives.
Realty Executives International chairman Rich Rector said in a statement that Realty Executives is "incredibly focused on supporting our brand for our current and prospective franchisees by providing the right environment, tools and systems for them to succeed in their real estate businesses."
By being focused on those things, he said, "we’ve been able to sell 34 franchises, renew 46 franchises and open 45 new offices year-to-date (in) 2011."
G. Scott Hurlock, ProsUSA vice president of franchise development, held the same position with Realty Executives until following Melton to join the new franchisor in June. Inline media and marketing services manager Kelly Zegers and director of member services Meghan Hartman are also veterans of Realty Executives International.
"As far as the technology goes, the people (at ProsUSA who are) running it at the franchisor level … understand online marketing via social media," Williams said. "They are not afraid to try new stuff. From a (search engine optimization) standpoint, they understand how to get our listings seen as opposed to the competition."
Williams said he likes the certainty that the flat-fee model affords, adding that it allows him more freedom to hire agents "who aren’t top producers necessarily, but want a great place to work, and a great split, and tools available to them at no cost."
The per-agent fee he paid Realty Executives International meant "I needed an agent to do a transaction about every 45 days to make that make sense for me," he said.
Williams said ProsUSA’s flat-fee model may not pencil out for small brokerages with only three or four agents — he has 17 — "but if you have a mid- to large-size office, it works all day long."