Thu 31 Jul 2014
Frachising is proving quite a success not just for franchises, but for shareholders too. There are now three franchised estate agents training on the London Stock Exchange - Winkworth, Martin & Co (under the offical name of Martinco plc), and Belvoir - making up a sizeable component of the listed agency sector.
The fact that they have to file detailed accounts gives us a chance to inspect their progress, though the one thing estate agents most want to know - how much revenue individual franchise branches are generating - is absent from the headline results. Instead, the commpanies report their own revenue, that is, the management service fees and other income they recieve from their franchises. That said, since their fees are calculated on a percentage to have a good guess at what's happening at branch level.
The companies have achieved remarkable growth, even compared to other agents. For instance, Winkworth revenues grew 15 per cent last year, with a stunning contribution of 31 per cent growth from its country offices adding acceleration to a nicely motoring London market. City research house Edition says, "It is noteworthy that from 2009 to 2012 it grew its revenue by nearly 10 per cent every year, despite overall housing transactions being largely stable throughout". Belvoir, rather staid in 2010-11, has seen revenue growth of 20 and 44 per cent in the last two financial years, while Martins saw growth coming in at 11 per cent last year after a rather disappointing 2012.
Those figures compare well with the corporates. Averaging growth for the last three or four years (some have a shorter track record on the Stock Exchange), the franchises definitely some in ahead - though admittedly that's not conclusive; LSL has been one of the fastest growers (though LSL contains a fair amount of franchise business). It's also worth noting that LSL's high growth rate has been helped by 62m of acquisitions, including Halifax Estate Agencies, in 2009, and Marsh & Parsons in 2011. That level of capital spending can put pressure on balance sheets.