The real estate franchise business in Korea is still in its infancy. Thus, its business foundation are not well established, and services that franchise headquarters are supposed to provide to the real estate franchisees are not provided properly. Fr...
The real estate franchise business in Korea is still in its infancy. Thus, its business foundation are not well established, and services that franchise headquarters are supposed to provide to the real estate franchisees are not provided properly. Franchisees are having difficulty of getting valuable outcomes from the affiliation due to improper services from the franchise headquarters that are not suitable for the real estate business. Most Franchisees recognize that the affiliation effect is rather limited to the right of utilizing business signs such as a trademark or a brand name.
The purpose of the study is to examine the principles and functions of real estate franchise system in Korea, and to present how to improve the management of real estate franchise business, which is in a transition period at the moment. The thesis also analyzes the effects of real estate franchise affiliation. Based on the survey result collected from the real estate brokers in Seoul area, the thesis identifies the current status of the real estate franchise business in the country.
In this study, I will also check functions and characteristics of real estate franchise system in Korea, when the current franchise businesses were established, current affiliation conditions, services being provided and characteristics. And I will analyze how much and in what aspects those real estate franchisees have positive influences compared to non-franchisees through the comparison between franchisees of which headquarters provide various services and non-franchisees which are spontaneous real estate agents.
I also sorted out real estate franchisees and non-franchisees among real estate agents located in Seoul and performed a survey to analyze affiliation effects of two groups by comparing (1)respective demographic characteristics, (2)knowledge and attitude on real estate franchise, and (3) business results and capacity of real estate agents in two groups.
Results derived from this study are as follows.
First, despite that most of real estate franchisees enter into a contract and pay expensive affiliation fee, they tend to get only advertisement effect which can increase their business credibility by acquiring highly recognized brand of the headquarters. Franchise headquarters do not advertise or promote business activities for the franchisees, but concentrate only on lending its brand name to franchisees.
Second, although headquarters and franchisees need to keep cooperative relationships in order to maximize mutual benefits for both headquarters and franchisees, headquarters are not capable of controlling the franchisees, and franchisees do not cooperate with the franchise headquarters.
Third, although the affiliation of real estate franchise may result in some positive effect, most franchisees are not satisfied with the level of services provided by the franchise businesses. Considering the expensive affiliation fee, franchise headquarters do not seem to provide the services that they are supposed to provided. There seem to be no significant difference in the outcome of business activities between franchisees and non-franchisees.
Fourth, franchise headquarters do not provide integrated services related to real estate brokerage such as continuous training, provision of management know-how, client relationship, advertisement, etc.
Due to the lack of previous researches on this topic and the short history of real estate franchise business in the country, the identification and the collection of data for real estate franchise businesses and their affiliation were difficult. However, the thesis could accomplish the study purpose by examining the effects of franchise affiliation in detail by comparing franchisees and non-franchisees for profitability and changes in the number of clients. In the future, further analysis on the business performance of franchisees and on-line agents to get more meaningful information.