The Ellis Team was with KW for two years and RE/MAX for nearly 18 before that. Now they are betting against franchises entirely. Here’s why leaders Rick and Tracy Ellis decided to make the move to a virtual brokerage in the name of expansion.

John Pohly wrote this article in collaboration with Rick and Tracy Ellis. In full disclosure, Pohly is also an eXp agent as well as a contributing author for Inman.

Rick and Tracy Ellis, leaders of The Ellis Team, were with RE/MAX for nearly 18 years when they made a move to Keller Williams Realty in 2017. And in 2019, they decided the franchise model wasn’t a fit for their business needs any longer, so they moved to eXp.

As Rick and Tracy Ellis evaluated their 2018 business results, the opportunities for growth were consistently met with obstacles. Closing over $30 million dollars in sales volume and approximately 90 transactions, The Ellis Team knew if their market center were more expansion-friendly and if there weren’t additional monetary penalties, they could do even better in 2019.

The recent changes in the market, along with their marketing programs, in an unrestricted, expansion-friendly company means growth capabilities are endless.

While franchise locations for many brokers depend on bricks-and-mortar and agent count, the pre-internet business model of some of these brokerages are in direct conflict with modern-day entrepreneurial teams wanting to build a branded system within the larger company.

Franchise owners were promised legal territories when they came into existence last century. Keller Williams was ahead of the curve with its franchise model in 1993. Once the internet was invented in 1995, it was only a matter of time before each industry was impacted by the benefits of the cloud.

All of these factors added to The Ellis Team’s decision to leave Keller Williams for eXp earlier this year. Below are five reasons the traditional franchise model might not be right for your team.

1. Office space location limitations

Rick and Tracy were so excited to make the move to eXp Realty from Keller Williams. In the Keller Williams model, the office locations are chosen based on being central for the most amount of agents.

For a luxury brand in the Chesterfield, Missouri-area that is expanding into other markets including Lake of the Ozarks (more than 150 miles away), they wanted more control over their office location along with their own designated offices.

Rick and Tracy: In most franchise models, you aren’t allowed to have an office outside of the market center without a lot of limitations and qualifications. EXp Realty is one company, and as a virtual brokerage, there are minimal restrictions for an agent or a team to secure their own office space, even in other expansion areas.

We also felt like at eXp, since there is one state-wide broker, and of course, a lot of online support, it was more inline with the type of company we wanted to work with. We feel this model will encourage more experienced Realtors who don’t need as much broker support.

Real estate is serious business, and you really have to know what you’re doing. These are our clients’ largest investments, and you really need a lot of experience in the industry.

After almost 20 years in the business, we still learn something new every single day. It doesn’t matter if you have a large head count just to fill the office because a small percentage of those agents are actually the ones doing the business.

We would rather have quality over quantity and surround ourselves with the agents who are doing the business through the virtual world.

2. Unwelcoming atmosphere

Rick and Tracy have been in real estate for about 20 years and spent almost 17 years with RE/MAX and almost two years with KW.

Rick and Tracy: We made the move to KW mainly because we felt they encouraged expansion, something we felt restricted with at RE/MAX.

Unfortunately, we found that in the end, you’re still battling the same things. The other market centers still aren’t welcoming about you coming into their territory. We felt we received a lot of resistance, which was surprising for a company that encouraged expansion.

Making a move to another brokerage isn’t a decision we take lightly, especially because we’ve only been with two companies in almost 20 years, but the eXp model simply makes sense, and it rewards the agents who are the ones doing the business.

3. Expansion location caps

Rick and Tracy: The other deterrent for expansion with the current KW model, for us, was the fact we would’ve had to also pay an additional cap to each market area we decided to expand in. That model just didn’t make sense to us as the rainmakers.

We felt we were already paying enough into our brokerage, and for a company that encourages expansion, the model just didn’t feel expansion-friendly to the agent team lead. It was a more beneficial model for the brokerage to benefit monetarily, in our opinion.

4. Lack of connectivity

The Ellis’ are happy to now have their own office location in Chesterfield, and later in the year, they plan to add additional offices in other areas including St. Charles County and the Lake of the Ozarks.

Rick and Tracy: Between the collaborative eXp World, Facebook Workplace, face-to-face video conferencing technology and smart website systems (kvCORE) that can handle multiple MLS locations in a state, we are able to create the accountability, systems and overall sense of being part of the virtual team through eXp.

The best part of the eXp technology and reporting is that it is not broken up per franchise location. EXp was designed as one company, and it allowed it to afford one eXp World, one Facebook Workplace, one reporting dashboard, one combined web presence.

The benefit to an expansion team is one toolbox for communication and measuring agent productivity in all 50 states and the Canadian provinces. If we decide to upgrade to a larger eXp website account for Missouri, the infrastructure already exists with company-provided tools. The expansion opportunities are endless.

5. Limited brand scalability

Rick and Tracy developed their brand with their four weekly real estate radio shows, podcasts and their own real estate magazine. Like many successful teams, they have a proven return-on-investment in their primary market, and their system can be leveraged in expansion markets.

The time, money and effort in creating an episode for their real estate radio show becomes a platform in a new market.

Rick and Tracy: Living through the recession we experienced in 2007 in the real estate world, our team experienced growth and some of our best years because we adapted and learned the importance of marketing and doing something different for our clients. It was then that we created our radio shows and later added our real estate magazine.

Marketing isn’t just a one-stop shop, you have to hit all areas to be successful, and those include radio, print, social and a heavy online presence. We feel we can now successfully do the same for other teams in other states and look forward to the opportunity to help others grow their team and not be penalized with additional caps.

After seven years on the air, we’ve grown a great network of vendors, media and local celebrity guests, and we feel our shows can be leveraged with our expansion teams to grow their business through our model.

Together we can leverage our shows through podcast and proven search engine results with The Rick and Tracy Ellis, Real Estate Radio Network.

We enjoyed our time with both RE/MAX and KW, but real estate is changing rapidly, and for us, eXp is now the best fit.

Rick and Tracy Ellis are Realtors and team leaders with eXp Realty, radio hosts and magazine publishers in O’Fallon and Chesterfield, Missouri. Connect with them on LinkedIn or Facebook

John Pohly is an eXp agent, author, coach and thought leader for internet marketing and online conversion funnels.

John Pohly is the C.F.O. (chief funnel operator) with iPohly Inc. in Austin, Texas. Connect with him on LinkedIn or Facebook.

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