What is a franchise? Overview of the Belgian model

If you're interested in real estate and looking to become self-employed as an independent real estate agent, you've probably already heard of the franchise system. In Belgium, this model has been in vogue for several years and the real estate sector is no exception. Many people choose this option when they decide to set up their own real estate agency, as it allows them to start out with a certain advantage even if they have little or no experience in the field. But how exactly does a franchise work? What are its features? Engel & Völkers, on the back of its international experience, describes the operation and main features of the Belgian franchise.

Main features of the Belgian franchise

In Belgium, franchising is defined as a collaboration between two companies that are legally and financially independent. The two parties to this collaboration are the franchisee, the independent real estate agent; and the franchisor, a major brand of Belgian real estate. In other words, franchising is an example of network commerce, similar to a trademark licence, for example. Three fundamental principles, however, distinguish franchising from these other forms of network commerce: the rallying signs for customers, the sharing of expertise and the technical and commercial assistance.

When the franchisee and the franchisor decide to enter a collaboration, the franchisee obtains the right to use the franchisor's rallying signs. This means the distinctive signs associated with the franchisor, starting with its brand. As part of this, the franchisee must respect the franchisor's user standards. In entering a collaboration, the franchisor also makes its expertise available to the franchisee. It is communicated to the franchisee during the initial training or ongoing training. The franchisor is also required to offer technical and commercial assistance to the franchisee. Here, again, the franchisor guarantees his assistance from the time the real estate agency opens and continuously throughout the collaboration.

Fees within the Belgian franchise system

The franchise system is based on a contractual relationship. In Belgium, contracts last for a specified period of time and are generally predefined. In return for the assistance and services mentioned above and provided by the real estate franchisor, the franchisee pays a fee. This fee can take three forms: the entrance fee, royalties and advertising fees.

Firstly, the franchisor must pay the entrance fee, also known as the initial flat fee, on signing the contract. This fee is used to cover the costs incurred by the franchisor during the initial period of the franchised agency. It covers the development of the concept, initial training of the franchisee and support provided before and during the opening of the franchised business. Royalties, on the other hand, are paid regularly. They often consist of a percentage of the franchisee's turnover, but can also be a fixed sum. They cover the costs incurred by the franchisor in operating the network. Finally, advertising fees are paid by the franchisee to finance national advertising campaigns. In some franchises, advertising fees are included in the royalties and should not be paid separately.

Set up your own real estate agency in Belgium

So there you have the main features of the Belgian real estate franchise. Frequently, the franchise concept also includes territory exclusivity. This means that you, as a franchisee, are guaranteed to be the only point of contact for the brand in a defined area. You won't be in direct competition with other franchisees in the network. To ensure that the franchisor's expertise is properly applied by the franchisee, the franchisor retains the right to choose its franchisees on a personal contract basis. This means you should always do prior research into the expectations of various real estate franchisors that operate a network in Belgium.

With more than 600 franchised companies in 37 countries, Engel & Völkers is an internationally recognised franchisor. Find out more about about the concept, requirements and licensing territories available by clicking the link below.