When it comes to limiting competition between franchises, territory matters more in some industries than in others. For example, coffee companies can thrive relatively close to one another because customers simply visit the most convenient location as needed, with no loyalty to one over the other. Fitness centers, on the other hand, need a big pool of regular customers to be successful. Real estate is perhaps the industry where territory matters most. If you want to open a real estate franchise, here’s how you can keep competition at bay.
Consider Existing Competitors
Since you can't protect a territory retroactively, it’s important to consider the location before actually opening. For example, how far are the nearest franchises, and from where do they draw their customers? Opening a real estate entity near existing competitors of the same name—or even those under a different parent company—will limit your potential client pool significantly.
Negotiate for Added Protection
Once you find a territory untouched by competing franchises, take steps to ensure it stays that way. To prevent future entities from encroaching on your customer base, include an exclusivity clause in the business agreement. The terms of this clause will depend on the circumstances but should ultimately prohibit the brand from allowing future owners to compete in the same territory. It’s important to note that some agreements automatically include such a clause whereas others leave it open to negotiations. As such, you must review the contract carefully to determine what kind of protection they’re offering and whether it will be sufficient in the coming years.
If you’re ready to take control of your career, open a real estate franchise through EXIT Realty Upper Midwest. Their opportunities are available to ambitious entrepreneurs in Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin. By using their proven system, you can run a successful brokerage that allows you to provide for your family. Their unique business model includes cash residuals to ensure a comfortable retirement, among other benefits. To learn more about joining their team, call (651) 505-3570 or visit their website.