The Real Deal New York

Want to own a Corcoran office? You’ll need at least $153K

Franchisors permitted to do new development work
By E.B. Solomont | January 09, 2019 09:33AM

Pam Liebman and Ryan Schneider

It will cost between $153,350 and $518,000 to open a Corcoran Group franchise, according to newly-filed public documents.

In a franchise disclosure form filed with the Federal Trade Commission, the New York brokerage said the initial franchise fee to open a new office is $35,000 (plus $10,000 for each additional office).

Corcoran said this fall it would franchise its name as it seeks to expand to “global megacities” and leisure markets starting with Miami. The company is projecting 22 new offices in 2019, according to the filing. Corcoran said it expects to open franchise locations in California, Connecticut, Florida, Georgia, Hawaii, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Rhode Island, South Carolina, Texas, Virginia, Washington and Wisconsin.

As of this month, the firm is actively selling to prospective franchisees, whose royalties will start at 6 percent but go down as they bring in more revenue.

Franchisees will also be required to contribute a percentage of gross revenue for brand marketing — to the tune of 1 percent for those pulling in up to $5 million; 0.75 percent for those grossing $5 million and $10 million; and 0.5 percent for those making more than $10 million.

Baked into the projected start-up costs are things like leaseholds improvements ($20,000 to $125,000), office furnishings ($40,200 to $80,200), computer equipment ($5,000 to $10,000) and building signs (up to $20,000).

“We will conduct an inspection of your proposed Office location to determine if it meets our then current standards for Corcoran® brokerage offices,” the filing said. 

By going the franchise route, Corcoran may inadvertently compete with its own owned offices, some skeptics have noted. And franchisors will be going up against other Realogy brands, including Century 21, Coldwell Banker and Sotheby’s International Realty.

In the filing, Realogy said franchisors will be able to engage in new development marketing — a notable detail given the dominance of Corcoran Sunshine Marketing Group. Franchisors will pay royalties of 6 percent of new development revenue.

In a statement, Corcoran CEO Pam Liebman said the firm’s brand will provide franchisors a “competitive edge” in their respective markets, “to help increase their market presence and build their business.”

Realogy said Alvaro Cardenas, senior vice president of global development, will oversee the franchise rollout.