Why Re/Max shelled out $100M for regional franchise rights this year

Fee structure in company-owned regions boosts the bottom line
  • Re/Max has spent more than $100M this year buying back its master franchise regions, mostly recently in Georgia, Kentucky, Tennessee and southern Ohio.
  • The franchisor gets to keep 100 percent of the franchise fees in its company-owned regions, which means that per-agent revenue in those regions is nearly three times greater than for independent regions.
  • Re/Max's Dave Liniger says centralization makes the company more efficient.

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Dave Liniger founded real estate franchisor Re/Max in January 1973 when there were no cell phones, fax machines were rare and the Internet had yet to be invented. Liniger grew his company by selling master franchises across the country, giving independent entrepreneurs the right to sell and service new Re/Max franchisees for a cut of royalty fees, starting in 1977. Regional Re/Max directors would help new franchisees open their doors, provide management advice, conduct quarterly sales meetings, set up training centers, purchase local media, hold local retreats and attend state Realtor conventions, Liniger told Inman. Meanwhile, the Denver-based parent company provided the overall growth strategy, trademark protection and group purchasing, he said. The strategy worked. Today, Re/Max has more than 111,000 agents, more than 62,000 of them spread across the U.S., and nearly 21,000 in Canada. " established us, got a regional presence, market share, and established a brand n...