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Belvoir looking at cheaper entry system for new franchisees – allowing them to work from home

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Belvoir is looking to introduce a cheaper entry system into its franchise network whereby franchisees could work out of their homes.

But chief executive Mike Goddard emphasised that it would not be a Purplebricks style of operation.

He said: “The whole point is to attract fresh blood into the industry.”

Dorian Gonsalves, chief operating officer, is leading the project and says that at this stage Belvoir is doing no more than consider its options and is unlikely to make an announcement until the end of this year.

It currently costs Belvoir franchisees around £120,000-£150,000 to set up a new high street operation from scratch, or if they buy an existing business, anywhere from £60,000 to £1.5m.

These options would still exist, but a cheaper option, likely to cost under £50,000, would allow a new franchisee to build up their business in a territory with the aim of growing it into an office-based operation.

Gonsalves said: “We like our business model and consider it to be working very well.”

Yesterday the firm reported strong results for last year, with group revenue up 43% to £9.9m, and management service fees – paid by franchisees – up 59% to £6.4m.

Gonsalves said that on its five-year anniversary since listing on the AIM stock market “We have trebled in value, doubled our footprint, and doubled the number of properties under management”.

He paid tribute to Belvoir’s franchisees, saying that they are very supportive of the group and its brands and determined to build the value of their own businesses.

He said: “The average value of a Belvoir franchise business is between £200,00 and £300,000, but we have one with a valuation of over £1.5m.”

With the acquisition last year of Northwood the group now has 302 outlets, and a total of 55,756 properties under management.

The firm stressed that this year the group will be making more acquisitions – principally targeting local high street independents that want to quit the sector as the fees ban draws closer. These businesses would be bought by existing franchisees, helped by central office’s funding programme.

The fees ban is likely to cost each franchisee some 10% to 15% in terms of lost revenue, and the group is actively discussing with its business owners ways of making up the deficit.

These include a heavier focus on sales – last year, the network sold some 5,000 properties, and yet sales revenue accounts for only 24% of revenue; the sale of insurance and other financial products; and the raising of fees charged to landlords.

Belvoir has had experience of the fees ban already being implemented in Scotland in 2014 – in fact, a firm clarification of existing legislation.

However, Goddard said that the ban in Scotland had far less effect than one in England will have, simply because Scottish agents charged less: when the ban came in, tenants’ fees represented only about 8% of typical agency revenue.

However, said Gonsalves, in Scotland agents simply put up their fees to landlords – resulting in higher rents charged to tenants.

“We did not lose a single franchisee in Scotland,” he said.

In England, it will not be as simple as that but solutions are being identified.

The introduction of compulsory Client Money Protection insurance will not affect any Belvoir franchisee, as this has been mandatory for the group’s business owners for years and is chiefly obtained through NALS.

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Source:: Belvoir looking at cheaper entry system for new franchisees – allowing them to work from home