When we talk of real estate franchising, we typically think of large organizations that offer turn-key branding and systems for broker owners. Now however, thanks to the Internet, individual agents can either offer their own branded "franchise" to other agents, or take advantage of those being offered. Here's how online-based "franchising" and licensing offers whole new possibilities for additional income and a lucrative exit strategy for clever agents who take advantage of it.

Franchising is a process of offering a "turn-key" brand to independent business people for a fee. One of the main advantages of buying into a franchise is that it is much easier to differentiate your business with an established unique brand that is offered by the franchisor. And of course, the franchisor benefits from the multiple streams of income generated by their multiple franchise fees. However, creating a legitimate franchise is very expensive, time-consuming and highly regulated. While these barriers to entry may preclude individual agents from starting their own formal branded franchise, there are other ways to take a unique branding idea and turn it into cash...

Licensed Branding —All the Benefits, None of the Hassles

One of the trends I recently wrote about is how agents are starting to specialize in one or more very targeted niche markets. Some of these agents have done such a great job of doing this that they ended up creating a viable "brand." And, when this brand is manifested as a highly unique and memorable Web presence, it may be licensable to agents in other geographical areas that want to specialize in the same niche but don't want to spend the time or effort of creating their own unique brand.

Having an intellectual property rights attorney create a solid license agreement is much easier, quicker and far less expensive than creating and launching a franchise. Yet, just like a franchise, you will receive a fee from each person to whom you license your brand.

One of the best examples of this is Joe Thyne from the Fort Hood area near Dallas, Texas. Joe's niche market is the military buyer and seller, as so powerfully evidenced by his Captain Joe Action site. In creating this Web presence, Joe realized that he not only had a viable and unique brand, but one that could be licensed to Realtors® serving other military markets. For example, one of Joe's first licensee's is Harry D'Elia in Glendale Arizona. Here, Captain Joe Action serves Luke Air Force Base via http:www.lukeafbrealestate.com. By licensing Joe Thyne's Captain Joe Action brand, Harry was able to get up to speed almost immediately in carving out his niche for the military market in his area. Meanwhile, Joe is able to collect a license fee from every market that his Captain Joe Action serves —not a bad "win-win" situation for all involved.

If You Qualify You Can Play

Another unique twist on the branded licensing idea comes from Jay Izzo of the Linda Craft Team in Raleigh, NC. He created a special My Executive Mansion site that caters to agents from around the world that work exclusively with executive mansion residences. Instead of licensing this brand to agents in different geographical areas, it provides a branded portal where they can post their executive mansion listings for free. The content of this site is clearly designed for the highly intelligent and discriminating executive mansion buyer. The only time an agent has to pay a fee is "if and when" their property sells via this site. This means that an agent can post their properties on this site and use this fact as a powerful differentiating tool during their listing presentations. However, not just anyone can post their executive mansion listings on this site. Jay and his team require that any participating agents demonstrate that they are truly full-time professionals specializing in this market. Candidates must complete a comprehensive questionnaire before they are even considered.

Targeted Branding is the Key

It is important to note, that in each of the cases above the licensor created a highly targeted brand that could be effectively utilized by other individual agents within their market area. And, in the first example, the licensing of the brand may give the licensee the right to sell their license (and years of good will developed by it) for a hefty fee when they are ready to retire. This effectively creates a lucrative exit strategy whose value increase with every new transaction completed under the licensed brand.

No longer is leveraging a branding idea the sole purview of large organizations with tons of cash and armies of attorneys. Clever real estate practitioners can create another cash-flow stream for themselves beyond just doing sales. And, in the process other agents can take full advantage of these innovators' creativity to almost instantly create a targeted presence within their market.

This is just the start. In PART II of this series we will look at how one major real estate franchisor is looking to help individual agents legally franchise their online brand. You will see how this group intends to handle all the legal, regulatory and marketing efforts that would otherwise preclude individual agents from even considering going into franchising.

NOTE: Mr. Internet®, RUSSER Communications, its staff and officers receive no compensation whatsoever from any third party vendors and makes no recommendations as to the suitability of the products or services mentioned in this article. Always thoroughly investigate any product or service before trying or purchasing.

Mr. Internet is the alter-ego of Michael J. Russer, an internationally recognized Internet speaker, trainer, author, and strategic consultant to the real estate industry. He's dedicated to helping real estate professionals leverage their people skills into profit on the Internet. You'll see his column on REALTOR® Magazine Online every month and in the magazine quarterly. Send your Internet questions to help@askmrinternet.com or you can visit his Web site at http://www.russer.com

This article is reprinted in its entirety from the May 2006 issue of REALTOR® Magazine by permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2006. All Rights Reserved other than mentioned above. Mr. Internet® is a registered trademark and Ask Mr. Internet!™ is a trademark of RUSSER Communications.