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Rawson expansion in north going according to plan

2007-11-29

Rawson Properties, which set up a northern region office in Gauteng in May 2005, is now looking back on two years in which they may well have broken whatever the previous record for growth in the real estate marketing section was.

Rawson Properties’ Regional MD, Sean McCauley, who in November 2006 took over from Tony Clarke (now the Rawson group’s MD and based in Cape Town), said that there are now 55 new Rawson Properties franchises in Gauteng, Mpumalanga, Free State, Northern and Limpopo provinces. These have all been established within the last two years.

What is more, he said, despite a period of consolidation this year, Rawson Properties are still on track to reach the Chairman, Bill Rawson’s, goal of 400 franchises countrywide by mid-2010. This, said McCauley, is not too high a figure if it is realised that the group total is already 149, because its expansion into the Southern and Eastern Cape has been proceeding apace.

“Three factors,” said McCauley, “have greatly boosted our initial growth: the first was that we went into two major franchise exhibitions and the international expo at the Sandton International Conference Centre was particularly rewarding, attracting exactly the sort of people we were looking for; secondly, we discovered that our reputation after 25 years of operating in the Western Cape was surprisingly good here in Gauteng - indeed many of those who applied for franchises had originally known us in the Cape. Thirdly, we went all-out to establish the Rawson Properties brand here, spending several million rand in the process. We have sponsored rugby and motorcar racing, our franchisees have put 70 of the distinctive yellow and black Rawson Properties cars on the road - and we have advertised widely. All these measures have made us well known in a very short space of time and have given us a slightly different, more friendly image to that of many other agencies.”

“The impression we have gained,” said McCauley, “is that there was a definite need for a new real estate agency group in the north: the feeling among many of our clients was that the established agencies had been on a very good wicket for some time and had slightly lost their edge.”

Rawson Properties franchises, McCauley warned, are by no means the cheapest on the market, but from the start he and his colleagues have had far more applicants than they could accept and their selection process has had to be one of the toughest ever seen in South African real estate sector.

“Initially we accepted one in every ten or twelve applicants,” said McCauley. “We are now taking on only one in 20 - but the good news is that these often tend to be already experienced agents or in some case franchisees from other major groups who like our branding and decided a change would be to their benefit.”

The rate of expansion this year in Gauteng has definitely been slower than in the first year, said McCauley, because an even greater emphasis is now being placed on training.

“It is above all the ongoing weekly training held at our Bryanston head office and at the franchise offices that sets us apart from other real estate franchisors,” he said. “The importance we place on training and the support we give to our franchisees through dedicated franchisee support managers has done a great deal to ensure the success of the new franchises in the north.”

In the coming year, added McCauley, the training will be even more important because with the introduction of the compulsory national qualification examinations, over 20% of current estate agents are likely to leave the industry.

“Our aim,” he said, “will be to preserve our team intact, but to do this they will have to work hard to get up to speed. The Estate Agency Board’s examinations are set to increase the professionalism of agents throughout the country by a quantum leap.”

One of the lessons learned from watching other groups in action, said McCauley, has been that it pays to avoid allowing franchisees to take on large territories.

“When we first announced our move into Gauteng we were approached by many people who wanted a franchise such as the whole of Pretoria. This is definitely not our style. Our experience is that an estate agent works best when he lives in and concentrates on a small area. That way he achieves far more impact, gives a better service and in the end makes more profit. This was corroborated by Louis Taljaard, Rawson Properties’ Northern Support Manager, who said that to date less than 5% of Rawson Properties’ franchisees had failed countrywide.”

This Rawson Properties’ philosophy, added McCauley, is taken seriously. Once a franchisee has established himself he will sometimes be encouraged to split and sell off part of his area to another franchisee. The seven franchisees who have already done this have in most cases been able to cover the cost of their original purchase in the process - an indication of how quickly the brand has taken off in the north.

Still in operation throughout the Rawson Properties group, added McCauley, is the arrangement whereby if a franchisee decides after two years that real estate is “not for him” he can sell his franchise back to the group - at the price he paid for it. Rawson Properties will only back out of this agreement if it is clearly shown that the franchisee ignored the training and operation guidelines, e.g. as regards the monthly financial and activity management report backs.

The Rawson group, added McCauley, has played a pioneering role in empowering black franchisees. At the Cape there are now 14 and in Gauteng there are eleven, the majority operating successfully in traditional white middle class areas like Krugersdorp, where previously it would have been almost impossible for a black agent to survive. In the townships, said McCauley, it is more difficult establish a home selling business due to the lack of knowledge in such communities about the whole system and in some cases a dire lack of legal documentation.

“Previously,” he said, “we found difficulties in this field because so many homes were inherited, bartered or exchanged owners without legal documents. We are, however, now finding that there is growing awareness of the virtues of homeownership among township dwellers and we expect to see this market take off in the next two to three years.”