Real Estate Franchise Systems in New Zealand: Antecedents and Growth Stages

This paper reports on an ongoing New Zealand study of franchising in the real estate agency sector and focuses on the franchisor perspective. It identifies industry specific antecedents for franchise growth and competitive advantage. These include market share; acculturation; direct office ownership; focus and parallelism. Of particular interest are the two notions of acculturation and parallelism. Acculturation involves the process of adopting and adapting - assimilation into the culture of first the industry and then that of the franchisor. Parallelism describes two separate business identities that exist side by side in real estate franchise groups. The franchisor business endorses the service quality of a series of independently owned, locally bound franchisees, enabling them to tap into a client base by positioning themselves in the local market more quickly than they could do single-handedly. The franchisee endorses the brand. Thus two entrepreneurial ventures exist parallel to each other, operating in a co-dependent manner. Parallelism is perhaps best illustrated in the international operations of real estate franchise groups where two brands are recognisable. Franchised businesses are able to draw on the strength of a globally recognised brand name, but also retain local branding. Hence real estate franchises allow parallel business venturing, where the sum of the whole is greater than the parts. An important strand of discussion in the paper is the delineation of progression through stages of growth. A model of these stages and interacting issues is provided using the case of a New Zealand franchisor.