A breakdown of franchise affiliates on the top 500 further illustrates the rise of a select few in power. Realogy and Berkshire Hathaway HomeServices have franchise affiliates, while eXp and Compass, both of which are ten and fourteen years old, do not.
Most Prolific Franchise Networks
Brokerage Name | 2021 Sides | 2020 Sides | 2021 Volume | 2020 Volume | Total Firms in Top 500 |
|---|---|---|---|---|---|
Keller Williams | 916,401 | 812,901 | $337,318,057,218 | $258,882,334,372 | 184 |
RE/MAX | 303,473 | 275,401 | $117,692,103,284 | $93,038,429,052 | 69 |
Realogy Holdings Corp. | 482,555 | 445,011 | $337,144,113,310 | $253,540,487,576 | 70 |
Berkshire Hathaway | 145,020 | 135,568 | $56,258,764,677 | $45,211,833,244 | 21 |
*Totals from RealTrends 2022 Top 500 Sides awardees.
In fact, of the top 500 companies by transaction sides, 344 – or 69% – are franchise affiliates of Realogy, Berkshire Hathaway HomeServices, RE/MAX, or Keller Williams. The number suggests that the aforementioned four franchise networks plus Compass and eXp control the lion’s share of the U.S. residential real estate landscape. But it may be the brokerage’s agents reaping the rewards.
Optional Franchise Numbers
The top 500 companies, which include Coldwell Banker, Sotheby’s, ERA, Better Homes & Gardens, Corcoran, and Century 21, are comprised of 70 autonomous affiliates of Realogy.
With each of these businesses included, the Realogy brokerage had $246 billion in sales. The franchise industry as a whole generated $337 billion in sales.
An explanation of each Keller Williams franchises
Keller Williams, the affiliate empire created by Gary Keller, and RE/MAX, the visionary business model created by David Liniger and currently looking for its next CEO, are by far the most widespread franchise networks. The franchise industry as a whole generated $337 billion in sales.
Franchise networks owned by Berkshire Hathaway are comparatively more localized. Twenty of the top 500 positions are occupied by affiliates, which are privately held and pay fees to Warren Buffett’s conglomerate. These 20 companies generated $54 billion in revenue. The brokerage HomeServices of America, which is owned by Berkshire Hathaway and generated $199 billion in sales, is not included in the production.
A breakdown of Keller Williams franchises
Franchise networks owned by Berkshire Hathaway is comparatively more localized. Twenty of the top 500 positions are occupied by affiliates, which are privately held and pay fees to Warren Buffett‘s conglomerate. These 20 companies generated $54 billion in revenue. The brokerage HomeServices of America, which is owned by Berkshire Hathaway and generated $199 billion in sales, is not included in the production.
Of the top 500 companies,184, or 37%, are Keller Williams franchisees. These 184 franchisees completed the same $337 billion in transactions as the 70 franchisees on the list who work for Realogy. The top Keller Williams franchisees completed a staggering 916,400 transaction sides, or over 10% of the above 7 million total existing and new home sales in the United States in 2021staggering 916,400 transaction sides, or over 10% of the above 7 million total existing and new home sales in the United States in 2021, were completed by the top Keller Williams franchisees.
Overall statistics show that Keller Williams has a wider reach whereas Realogy’s brands typically succeed in more affluent locations. The Go Network, the largest Keller Williams franchise system, in Arlington, Texas, averaged $361,000 on each side. Premier Sotheby’s International Realty, the largest Realogy franchise, in Naples, Florida, averaged $959,000 per side.
RE/MAX, meanwhile, has 69 of the top 500 companies, which compiled $118 billion in transaction volume.
Can they continue to expand their market share?
It’s unclear, though, whether these prestigious franchise networks and brokerages bring in enough money to allow their brand parent to keep up with market share growth.
For Keller Williams, a private corporation that has chosen not to reveal its financials, this question is impossible to answer. However, RE/MAX is a business that is traded publicly. After posting a net profit over the previous two years, the Denver-based company lost $21 million in 2021. $329 million in revenue was generated by RE/MAX, of which $66 million in broker fees and $119 million in ongoing franchise fees. In other words, the gross transaction volume of the top 69 RE/MAX franchisees exceeded the yearly revenue of the company by 360 times.
Additionally, there is a disconnect between market influence and revenue for brokerages like Compass and eXp. After commissions and other associated costs were paid out in 2021, Compass did keep $1.1 billion in revenue, but the brokerage struggled to a $494 million net income loss, raising concerns about how much longer it can eat away market share. Over the past two years, eXp has consistently reported profits, including $82 million for the entire year of 2021. However, its income of $252 million in 2021 is lower than RE/after MAX’s commissions and other costs are reimbursed to agents.
These brokerages each have a unique business model and growth plan. They do, however, all receive a small portion of the revenue generated by their agents.
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