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POSTAL REGISTRATION NO HR/FBD/262/08/-10 31 MAY, 2010 Vol. 11 No. 4 RS 60n n n

Yearof Success inFranchising12

REALTY INDUSTRY 

BULLISH AGAIN

 YOUR BANK 

AS YOUR BROKER

ONLINE IS

IN LINE

MONTEK’S

TAKE ON SMEsMONTEK SINGH

AHLUWALIADEPUTY CHAIRMAN,

PLANNING COMMISSION

LAUNCH PADFOR LEARNERS

SATYA NARAYANAN

CHAIRMAN,CAREER LAUNCHER LTD

MANAGEMENTPALETTE

AKHIL SHAHANI,

DIRECTOR,CENTRE FOR

MANAGEMENT

BROKERAGE SERVICES

SPECIAL ISSUE

CONTOURINGPROFITSKEITH DZIKIPRESIDENT,

CONTOURSINTERNATIONAL LLC

PLUSIssue Focus:

An analysis:

Take stock Realty Check 

Independent v/s Franchise

ESOPs-a Profitable ToolAngel For Start-UpsBank on Relationship Manager

Sam ChopraDirector, RE/MAX India

MoneyMakingMoneyMakingin Real Estatein Real Estate

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44 MAY 2010| THE FRANCHISING WORLD |

Real estate, one of the fastest growing sectors in India, hasonce again picked up pace af ter the slowdown. Leading theway is RE/MAX (Real Estate Ma ximums), which had enteredIndia in 2009 when the ef fect of economic crisis was at itspeak. RE/MA X br ought together 80 countries across the worldon a single realt y map and re-wrote its unique success story.Here's a snapshot!

BUSINESS FOCUS | RE/MAX

Opportunities

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I

BirthofRE/MAX

Road toIndia

WhyIndia?

NDIA leads the pack of top real

estate investment markets in Asia

for 2010, according to a study by

PricewaterhouseCoopers (PwC) and

Urban Land Institute, a global non-

profit education and research

institute. The real estate industry is

standing up again, leaving the worsebehind and RE/MAX is all set to

revolutionise the way real estate

functions in this partof theworld.

RE/MAX wasfounded by Dave and

Gail Liniger in 1973. With a pen and

pad in a small room, they laid the

foundationof a system, which is today

the most powerful brand in the real

estate sector. From a single office in

Denver, Colorado, it has grown into a

global network of nearly 1 lakh salesassociates and 7,000 franchised

offices in 80 countries.

Blending the administrative skills

of its franchisees and the

salesmanship skills of its real estate

agents, RE/MAX has enjoyed

unprecedented and historic global

growth even at the time of economic

and financial instability in many

countries. Be it maximum

commission model, which gives

agents up to 90 per cent of  

commissions, cutting-edgetechnology, industry training or

highly-effective corporate

advertising, RE/MAX ensures that all

agents gain maximum value from the

system, which motivates them to give

their best. RE/MAX has always been

inspired by women professionals. As

per Saloni Chopra, Executive

Director, RE/MAX India , “One of the

key factors behind the success of 

RE/MAX has been the profiling of 

housewives and working women

professionals as real estate agents;

something which nobody else had

initiated before RE/MAX. Gail Liniger

was one of the founding members of 

RE/MAX and even today it is being led

internationallyby a woman.”

“Global expansion not only

expands the network's brand

presence, but also creates more

opportunities for agents in the US,

Canada and other established regionsto focus more on international

business and exchange more

referrals,” says William Soteroff,

RE/MAX International Senior Vice-

President, GlobalDevelopment.

Less than a year ago, Executive

Director, RE/MAX India, Saloni

Chopra and Director and Chief 

Spokesperson, RE/MAX India, Sam

Chopra were given the key

responsibility to expand the RE/MAX

network in India. Speaking about

RE/MAX's entry into India, Chopra

says, “Slowdown was a major reality

check for this industry. The biggest

learning lesson was the fact that this

business of individuals will fall apart

once the buyers/sellers get into a

conservative mode. The only way to

counter such crisis situation was to

have a strong network so that even

when theindustry hits a slump,there is

some business for everybody through a

proactive referral programme.”Presently, RE/MAX has a network

of 20 master regional franchisees

(regional offices) and about 50 broker

owner franchisees (franchised offices)

in 11 states across the country,

including Punjab, Chandigarh, Delhi

NCR, Rajasthan, Madhya Pradesh,

Gujarat, Maharashtra,Andhra Pradesh,

Karnataka, Kerala and TamilNadu.

Before entering India, RE/MAX

conducted an extensive research,

involving about 500 brokerage houses

pan-India with agent strength of at

least five agents per office. They

received a mixed feedback from this

research with about 57 per cent

people saying that RE/MAX would be

successful in India and about 43 per

cent saying the Indian market was not

ready for RE/MAX.

The two important conclusions

that RE/MAX drew from this research

were, firstly, the franchise modelwould gain acceptance mostly among

 RE/MAX hot air balloon flying outside RE/MAX International Headquarters in U.S.A

 A RE/MAX Franchised Office

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46 MAY 2010| THE FRANCHISING WORLD |

younger entrepreneurs and agents, as

against people who have spent 20-30

years operating the conventional

modus operandi. Secondly, this

model would make better economic

sense to existing offices which will

have more number of agents working

in theoffice.

As a first step, RE/MAX divided

India into 32 regions, depending upon

the market

p o t e n t i a l .

As per the

RE/MAX franchise

model, these master

regional franchisees

further appoint

franchisees who

open RE/MAX

franchised offices in

their regions. The

owners of these

RE/MAX franchised

offices further

appoint broker

associates, who are real estate agents

working on an independent quasi-

franchisee contract and carry out real

estate transactions under the globally

trusted RE/MAX brand.

RE/MAX's commission-basedmodel is best suited to one and all

because it benefits everyone at every

level. On every transaction, the

commission earned is apportioned

among different levels of hierarchy.

Ninety per cent commission is split

between the franchised office and the

real estate agents on the basis of a

predecided split which is based on the

experience and tenure of the real

estate agent. The remaining 10 per

cent gets segregated in the following

percentage: master regional franchisee

-7 percent,RE/MAX India-2.1 per cent

and RE/MAX International-0.9 per

cent.

This commission split ensures

maximum satisfaction to the agents,

who as quasi-franchisees under an

independent contract, share the office

expense of franchised office in order

to get most part of the commission.

The franchised office thus bears

minimal operational expenses and

can work even on a low commission

by having a huge team of real estate

agents.

Five years down the line, RE/MAX

aims to open 1,000 broker offices

across 32 regions. It is also looking at

expansion in tier I, tier II and tier III

cities across India. It is looking for

master regional franchisees with an

investment potential of Rs 50 lakh-1.5

crore in Jammu & Kashmir, Uttar

Pradesh, Uttaranchal, North East,

West Bengal, Orissa, Bihar,

  Jharkhand, Goa and some parts of 

Franchisemodel

Benefitsforeveryone

ateverylevel

Brandexpansion

What kindof growthdo youperceivefor theindustry inthe next fiveyears?

Howdo youmonitor servicestandards beingfollowedbythe brokers?

Post slowdown, is the market back in revival mode? Throw somelight on thepresent marketconditions?

What is the reason behind limited players in organised realtybrokeragesector?

We expect the industry to grow at a rate of more than 25 per centCAGR. Real estate has always been a key contributor to the growth of

 thecountryandwillcontinuetodoso.In the coming few years, consumers could see manifold housingoptions emerging in the industry. Besides this, affordable housingprojects are also goingto drive volumes forthe business,which wouldmean massive increase in the number of second time and third timeend-usersand ultimately, increase in thenumberof transactions.

The real estate agents are monitored by the franchisees, franchiseesare monitored by master regional franchisees, master regionalfranchisees are monitored by RE/MAX India and RE/MAX India ismonitoredby RE/MAX International.

 Yes, certainly. The real estate industr y is on an upswing and both end-users and investors are back in the market. Encouraged by this

development, manydevelopers havemarginally raised theirprices andsome are even going to launch their IPOs to raise capital for startingnew projects, which are a par t of their scheme of things for 2010. Butlookingat thepresentday realestate brokerage market,thereis a needgap intheindustry and a hugeopportunity which weare tryingto takeadvantage of.

The main reasons behind few numbers of players in the high potentialrealestateindustry are:

Lack of respect for the industry because of its highly unorganisedfunctioningand extremely unprofessionaland uncouthimage

=

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=

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=

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.

.

Every marketis unique,hence, localnetworkandi tsknowledgeis ofparamountimpor tance

Involvement of cashcomponentin mostreal estate transactionsMost of the organised players in this category have confined their businessto onlyhigh valueor commercialprojects

THE LEADERREALTYSam Chopra, Director, RE/MAX India in conversationwith TFW shares the prospects of the r ealty sector

Saloni Chopra,Executive Director, RE/MAX India.

“Women have been extr emely successful in the r eal estatebusiness in the U.S and Canada. RE/MAX India would like to continue that legacy and bring many ambitious women

in this industry as both franchisees and real estate agents.”

Sam Chopra with Enterprise Asia's Most Promising Entrepre neur of the Year award 

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47 MAY 2010| THE FRANCHISING WORLD |

Madhya Pradesh, Chattisgarh,

Rajasthan and Punjab. It is also

looking for broker office franchisees

acrossthe country with an investment

potential of Rs 5-15 lakh and broker

associates with an investment

potential of Rs 10,000 to 1 lakh across

India. RE/MAX also keeps underconsideration the location where the

franchise office is going to be opened.

Commercial centres are on the

priority list, as they arelikely to attract

more visibility and accessibility.

All RE/MAX franchisees undergo

an extensive training, comprising

modules on sales, marketing,

technology, administration, franchise

and enterprise management. The

training is an ongoing initiative,depending upon the category of the

franchisee, training is conducted at

multiple levels which includes the

training at RE/MAX International

Headquarters at Denver-Colorado,

international conventions and

conferences in Las Vegas and

Orlando, international broker owner

conferences at Chicago and Denver,

training at the national office in

Gurgaon and all regional offices

across the country. All franchisees

enjoy support on all aspects of theirjob profile, including recruitment of 

agents, office promotions, tie-ups

with developers,technology, etc.

RE/MAX's headquarter and

regional offices extend complete

support to the franchisees, right from

setting up the office, creating internal

and externalprocessesto recruitagents

and tie-ups with developers for listings

at national,regional and locallevel.

RE/MAX facilitates its franchisees

with network, training, technology

and the power of the world's strongest

brand in real estate which helps them

in makingtheirlocalbusiness global.

Real estate builders/developers

also enjoy multiple benefits after

having a tie-up with RE/MAX, as it

provides a global window for their

inventory. The local network of about

50 RE/MAX franchised offices

supplemented with the global

network of 7,000 RE/MAX offices,

helps them in seeking prospective

buyers not only from the local and the

national geography butalso in form of 

NRIs and expatriates from 80

countries across the world. Hence

RE/MAX facilitates its affiliate

developers/builders a highly

organised and well structured one-

point marketing solution as real estate

agents from each RE/MAX office in the

network wouldmarket theirproperties.

The RE/MAX franchise model has

divided the Return on Investment

(RoI) on the level of transactions

made. For the master regional

franchisee, RoI depends upon the

number of broker office franchisees

appointed and the transactions made

in the network of broker offices in

his/her region. For the broker owner

franchisee, RoI entirely depends upon

the number of real estate agents

appointed and the transactions which

aremade by theagents inhis/her office.

Adding another feather in its cap,

RE/MAX plans to open a RE/MAX

Realty Institute. This initiative, open

to all, will

e n c o u r a g e

academic learning in the real estate

industry. The flagship course will

blend classroom learning with

practical exposure to help candidates

attain a 360-degree perspective of the

profession and imbibe the best

practices in the profession.

The primary aim of this initiative

is to groom fresh graduates into

efficient real estate agents, through

which most of them could be further

absorbed by their own franchised

offices, this will further facilitate the

franchisees with the most important

aspect of their key responsibilities,

recruiting agents.

RE/MAX has a strong network

across the world. RE/MAX's global

franchise sales in 2009 witnessed an

explosive growth in several regions.

RE/MAX International has already

established a strong presence in US,Europe, South Africa, Australia and

Middle East but the strongest growth

for RE/MAX in the coming years will

come from newly appointed regions

like Bahamas, Brazil, Columbia,

Ecuador, Jamaica, Morocco, Peru,

Uruguay and India. In 2009, RE/MAX

witnessed 200 per cent growth in

South-West Germany, 100 per cent

growth in Portugal and 45 per cent in

Israel.

In India, RE/MAX has grown from

a startup in 2009 to an organisationwith pan-India presence in less than a

span of one year. Mirroring strong

history of growth, RE/MAX India is

positioning itself to become a

household name in real estate. Joining

RE/MAX as a broker/owner of a

franchised office or as a real estate

agent means that you are in business

foryourself, butnever by yourself!

 For franchiseenquiries,

 please contact AmanRaj at:

 Email- araj@remax.in

 Phone:+919654965013.

Train togain

PartneringwithRE/MAX

Returnon Investment

Realty instituteonanvil

Successstory

  © 2010 TFWi i

Franchise DetailsInvestment:Master Regional Franchise:Broker Owner Franchisee:Real Estate Agent:Royalty Fee:

Franchise Term:Master Regional Franchise:Broker Owner Franchise:Real Estate Agent:

Locations:

Rs 50 lakh-1.5 cr Rs 5-15 lakh

Rs 10,000 1 lakh10 per cent per transaction

About 30 per cent per franchise sale

10 years5 years

1 year 

High Visibilit y and Accessibility

William Soterof f, RE/MAX International

Senior Vice-President, Global Development

“Global ex pansion not only ex pands the network's brandpresence, but also creates more opportunities for agents in theUS, Canada and other established regions to focus more oninternational business and exchange more referrals.”