Re/Max International is sending out new franchisee contracts and the brokers are not happy. So unhappy with the terms that they are sending them back and leaving the Re/Max brand. That is what Re/Max Valley Properties, a huge Silicon Valley, California brokerage is doing.

Now with homes not selling as well and for as much, I am sure Re/Max corporate is facing an income issue. But forcing a higher fee to ones franchisees is not the way to grow the brand. Cutting back at corporate is to show that we are all sharing the pain is.

It will be interesting to see how this plays out. Re/Max has been a high flier in the real estate world. But if these contracts are as onerous as the Valley Properties say they are, Re/Max agents are going to end up being at a disadvantage. If the brokers money all heads to corporate, how are they going to support their agents?

“The (Re/Max) model has morphed to something that is significantly different from what it was,” Dennis Badagliacco said. “They are asking franchisees to take huge risks, and they are charging more money in a down market.”

Re/Max officials said there is no large-scale franchisee exodus…

“When I saw the new (Re/Max) contract, I said, ‘No way,’ ” Thomas said. “They want their income stream guaranteed, but no one is guaranteeing mine. I was going to be on the hook for $1 million a year.”

The partners already have been joined by Mel Wilson, another former Re/Max franchisee who jettisoned his arrangement in the past month and is now using the Altera name. Wilson has a single office with 40 agents in an upscale area of Northridge near California State University.

“Re/Max has been a good brand, and I think they have done a masterful job with their business model. But today, their fee structure is too expensive for my agents. I think the new contract is out of touch with the realities that agents and brokers have to deal with in this environment,” Wilson said. via the  Silicon Valley / San Jose Business Journal:.

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