Growing Las Vegas area-based brokerage Realty One Group Inc. is adding a franchise wing to its operation with an eye on expanding nationwide and eventually going public. The company is the country’s 11th-largest brokerage when ranked by completed transaction sides in 2011, according to Real Trends, and expects to add 100 franchisees along the California coast in the next year, with the first by the end of the month.
The franchise move comes on the heels of the company’s rocket-like growth in the last few years. Real Trends ranked Realty One Group No. 1 on its list of top five-year (2007-2011) brokerage movers based on transaction volume increase (12,475) this year. Last year, the brokerage completed 15,475 transaction sides worth more than $2.6 billion in sales volume.
Realty One Group was founded in 2005 and now comprises 4,000 agents in 15 offices in Arizona, Nevada and California. In May, the company acquired the 40-agent Southern California brokerage eVantage Home Realty. Last year, it acquired one of Arizona’s largest brokerages, Phoenix-based John Hall & Associates.
The company’s franchise model will be as unconventional as its brokerage one, said Kuba Jewgieniew, CEO and founder of Realty One Group. The brokerage has a two-tiered fee structure for agents: a flat fee of $375, regardless of a transaction’s amount, for more experienced agents; and a 70/30 commission split for agents who choose to be mentored by the brokerage.
The franchise fee structure will be similar, Jewgieniew said: Instead of paying royalties or annual fees, all agents will pay a flat monthly fee of $100 (of which the franchisee keeps $75) and a per-transaction fee of $200 (of which the franchisee keeps $150).
The company will keep growing the brokerage side of its business along with the franchise system, he said.
Franchise operations for the company will be headed by franchise veteran Rick Hudson, who served five years (from 2003 to 2008) as senior director of franchise management with the franchise-owning real estate giant Realogy.
"We think we have something special," Jewgieniew said. "We have a proven business model." The company has a stringent evaluation process for bringing on agents, which will continue for franchisees, he said.
In a 2010 Las Vegas Sun interview, Jewgieniew, a former stockbroker and computer programmer, said, "What I am trying to create is the new standard in how a brokerage should be run." That new standard includes a focus on technology and in-house software development, he said. Realty One Group has developed and operates its own management and transaction software, he said.
The company has been profitable since its fourth month, Jewgieniew said. His focus on growing in a quality-focused manner, the fact that he’s the sole owner and that the company’s debt-free, gives him optimism about the success of the nationwide expansion.
"We’ve had explosive growth," Jewgieniew said, "and we’re at a tipping point." He expects the company will go public sometime next year.