The city’s largest residential brokerage firm, Prudential Douglas Elliman, could drop “Prudential” from its name and leave the global network if it cannot hammer out a new franchise agreement to replace one that expires in about a year, Dottie Herman CEO of the residential firm, told The Real Deal.
Top executives at Elliman are scheduled to meet this month with a division of the Canadian conglomerate Brookfield Asset Management to discuss the future of its license agreement for the name Prudential, Herman CEO said.
The residential brokerage, led by Howard Lorber, chairman, and Herman, is the largest franchisee in the Prudential Real Estate and Relocation Services network. Prudential Financial sold the real estate and relocation business last December to Brookfield Residential Property Services for $110 million.
In an article about Brookfield Asset Management this month, The Real Deal reported that Prudential Douglas Elliman may reverse its decision to leave the Prudential network, now that Brookfield is the franchisor, but was waiting to hear from them.
Herman, in an interview with The Real Deal last month, said she and Lorber told Brookfield Residential Property Services executives in a brief meeting in her office at 575 Madison Avenue just after Brookfield’s purchase that the brokerage had not planned to renew the expiring franchise, because the firm was constrained geographically. She pointed to her inability to open offices in Boca Raton and Palm Beach, Fla., but sources said the same problem existed in the New York metro area.
“I sat with them for five minutes, and we said, look, we were leaving, but the only real reason was because we felt we couldn’t grow,” Herman said. “We have a strong enough name, and we don’t need the Prudential name. We basically want to see what they have to offer. If they tell us we can’t grow, we are not going to stay with them, either.”
Herman said her firm does not benefit significantly from the Prudential name, in fact, “people come to me to ask to franchise our name,” referring to the name “Douglas Elliman.”
She also said her impression from the December meeting was that Brookfield did not know exactly what it was going to do with the Prudential franchise. She had not been consulted on the acquisition, even though Herman’s brokerage is the largest in the network.
“I don’t think they really knew the direction they were going in,” she said. “I think they are trying to find out from all the people in Prudential [franchisees], what it is that they want.”
Brookfield did not immediately respond to a request for comment. Last month it said in a response to questions about the franchise agreement, “Prudential Douglas Elliman Real Estate is in good standing as a member of our Prudential Real Estate network. We do not comment on affiliates’ franchise agreements.”
Brookfield Residential Property Services is a division of Brookfield Asset Management, a Toronto-based firm with a wide range of real estate, energy and transportation businesses, including Manhattan-based Brookfield Office Properties, which owns office buildings including the World Financial Center.
Franchisees such as Elliman pay fees annually based on sales volume, with the percentage paid declining as revenue increases, Herman said.