Blow For Re/max As Franchisees Defect To Own Start-Up.

Date Published 24 October 2012

The RE/MAX brand has been dealt a huge blow after a number of franchisees defected to a completely new rival organisation.

The brand new Scottish Property Centre launched on September 3 with three offices but now already has ten – all of them ex-RE/MAX franchisees. Four other agents, a mixture of ex-franchisees and independents, are set to join shortly, and there are four signed expressions of interest from independents.

A total of 15 offices are expected to be up and running by the end of the year.

The Scottish Property Centre was started by Andrew Reid (pictured, on the left) and Mark Higgins.

Higgins, who had been a RE/MAX franchisee for ten years, said: `In our opinion, the business model does not stack outside America, and particularly when the market is not rising.

`In America, commission rates when you sell a house are between 4% and 6%. But here in Scotland they are 1%, and when you have to hand over £650 a month plus 9% of earnings, that is a lot of money that goes straight out of the door.`

The new business offers franchises at £500 per month, but also operates a corporate business model whereby it will open and run new offices. As well as sales and lettings, SPC is launching a financial services wing.

It has also dispensed with RE/MAX’s model of paying people commission-only in favour of a fully-employed business.

Higgins emphasised that there had been ‘zero legal dispute’ between the Scottish master-franchisor of RE/MAX and its former franchisees.

On the Scottish RE/MAX website, some 24 sites are shown on a map as having offices – well down from a peak that is believed to have been between 75 and 80. It is also not clear whether some of the 24 sites include defected offices and any ‘virtual’ branches. RE/MAX has been invited to comment.

The SPC’s ten branches are between Inverness, Lanarkshire and Glasgow. A new website has been launched, and its founders have pledged to spend more on property marketing and exposure than any other national estate agency, to increase exposure across all platforms for customers.

Andrew Reid, co-managing director of Scottish Property Centre, said: `As a group of experienced business people we felt we could better serve the needs of our customers if we could provide a different service proposition to what is currently available in the marketplace – no easy task but one which we believe is achievable.`

Higgins added: `The needs of customers are changing, and in today’s market, house sellers and buyers need the agility and competitive spirit that comes with true independence.`

The Scottish Property Centre forecasts a further five offices will open by the end of the year and says it has been busy vetting applications to join from other estate agency networks as well as independent operators.

RE/MAX claims to be the world’s biggest estate agency brand, starting in America nearly 40 years ago and with more than 6,300 offices in over 80 countries. It is not immediately clear how many of those offices are in the UK, where different master franchisors operate six different areas. It is thought that at least one of those regions has no RE/MAX offices currently.

But in London, RE/MAX franchise director Peggy Su said that business is thriving. She said when she and business partner Andrea Frigo took over the London franchise last year, there were just two offices. She said there are now six, with a further two about to open. She said: `We are extremely ambitious, and are aiming for 50 offices in London by 2015.`