Brightway vs Goosehead - Franchise Agency Opportunities

Mar 24, 2019

  1. johnkearnsagency
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    johnkearnsagency Expert

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    I would like to hear feedback from franchise owners of both Brightway or Goosehead on there experience as a franchise owner with each of these companies. Representatives of both companies, please correct me wrong in my understanding of the franchise opportunities below.

    I like the idea of where the agency franchisor provides the customer service aspect of the agency for the agency franchisee, plus back-end support. I know that is not for all agents, but as for me I would rather focus on the sales and marketing aspects of my agency. I'm looking at a few other opportunities, but they don't provide customer service support or the local marketing support that both Brightway and Goosehead provide.

    Both companies boast that there retention rate is 85% or better. Some information I've found points to be in the 90% retention rate.

    Brightway's franchise fee is 30K, if doing the office agent option or 60K, if doing the retail agency option. Brightway now offers an entry method without any upfront cost, that's a non-franchise option, which is six months, to start building an agency at no-costs or buy-in, before jumping into one of the franchise options, which Brightway will provide in-house financing for.

    Goosehead's franchsie fee is 25K, if paying in one-lump sum or 50K, if making a 10K down payment and making monthly payments till the franchise fee is paid off.

    Brightway and Goosehead, both say you'll need about another 20K to 40K in capital for your retail agency. These additional costs are for location, office furniture, and on-going expenses you'll need to get your franchise up and running. Brightway's office agent program is much less and can consist renting an office or desk space from a real estate or mortgage broker or a office retailer such as Regus. I'm unsure, if Goosehead will allow you to rent an office location over a retail store space.

    Brightway's franchise options are initially 5 year contracts with unlimited amount of renewals. The franchise renewals have no additional cost associated.

    Goosehead's franchise's are initially 10 year contracts with unlimited amount of renewals of 5 years. The franchise renewals have no additional cost associated.

    Both Brighway and Goosehead provide you a in-house industry award-winning service teams to take care of your customers and offer you the marketing support to grow your franchise. Both boast, that they have a higher commission structure then other agency groups, clusters, networks, etc. With new business commission being between 15% to 20% for new business and renewals.

    There commission split for new business differs some. Brightway's depends upon which franchise or non-franchise option you are doing. Brightway's retail agency franchise option is 85/15, office agent franchise option is 80/20, and non-franchise option is 50/50.

    Both companies take 50% of renewals.

    I'm unsure what the split on business that the service center cross-sells or re-writes for each company. I'll assume it's the same as new business.

    Both companies require no production requirements under each franchise option. Only Brightway requires a certain amount of production requirements for the non-franchise option.

    Both of these opportunities are captive independent insurance franchises. You do not own the expiration on the policies, but the economic interest only.

    Brighway is a privately-held company, while Goosehead is publicly traded.

    From what I can tell, both companies provide you an agency franchise local telephone, website, email, marketing, and branding.

    With both opportunities you get on-going costs, that you must pay the franchisor, such as agency management, comparative rater, and errors & omissions. Only with Brighway's six month entry method do you not have to pay the on-going costs for the agency management or the comparative rater. The six month entry method is also 50/50 commission on new business. You can renew your contract for an additional six months once under the non-franchise option.

    Brightway's carriers they represent consist of Alamance Farmers Mutual, AllRisks, Allied, Amelia Underwriters, American Bankers, American Integrity, American Strategic, American Traditions, Ark Royal, Bankers, Bass Underwriters, Cabrillo Coastal, Capital Preferred, Chubb, Citizens Property, Cypress Property and Casualty, Dairyland, Edison, Elements Property, Encompass, Excalibur National, Federated National, Florida Family, Florida Peninsula, Florida Specialty, Foremost, Frontline, Geovera Specialty, Gulf States, Gulfstream, Hagerty, Heritage, Homeowners Choice, Homeowners of America, Hudson, Infinity, JIBNA, Johnson & Johnson, Lexington, Lighthouse Property, Maison, Mercury, Metlife, Modern USA, National Flood Insurance Program, National Flood Services, National General, National Idemnity, National Risk Solutions, Olympus, Peoples Trust, Prepared Insurance, Progressive, Safeco, Safepoint, Safeway, Security First, Security National, Southern Fidelity, Southern Oak, St. Johns, State Auto, The Flood Insurance Agency, The Hartford, Tower Hill, Travelers, US Coastal, United, USLI , Universal Insurance Co., Universal Property and Casualty, Velocity Risk Underwriters, Vertus Insurance, Weston, Wright Flood, and Zurich.

    Goosehead's carriers they represent consist of Adirondack, AEGIS, AIG, Allrisks, Allied Insurance, Allied Trust, American Integrity, American Reliable, ASI, ATIC, Anchor, Ark Royal, Arrowhead Exchanged, Bamboo, Bankers, California Earthquake, California Fairplan, Capitol Preferred, Chubb, CNA, CSE, Cypress, Encompass, Federated National, Markel, Foremost, Grange, Gulfstream, Hagerty, Hanover, The Hartford, Hertiage, Homeowners of America, Imperial, Infinity, JIBNA, Johnson & Johnson, Kemper Preferred, Kemper Specialty, Liberty Mutual, The Main Street American Insurance Group, Mercury, Metlife Auto & Home, Mexipass, Modern USA, National General, National Lloyds, Nationwide, Olympus, Orchid, Pacific Specialty, Palomar Specialty, People's Trust, Personal Umbrella.com, Progressive, Protective, Pure, QBE, RLI, Safeco, Sagesure, SFI, Stillwater, Tapco, Texas Mutual, Texas Windstorm Ins. Association, The Philadelphia Contributionship, Tower Group, Travelers, UPC, Universal North America, Universal Property & Casualty Company, US Assure, Wellington, and Wright Flood.

    It's worth to note, that not all carriers or it's products are available in all states for both Brightway and Goosehead.

    Brightway operates in all 50 states, but currently has franchises in 22 states (Ala., Ariz., Calif., Colo., Fl., Ga., Ill., Ind., Ks., La., Mich., Mo., N.Y., N.C., Okla., Pa., S.C., Texas, Tenn., N.J., Wash., and Wisc.).

    Goosehead operates in all 50 states, but currently has franchises in 21 states (Calif., Colo., Conn., Del., Fl., Ill., Ind., La., Md., Mich., Mo., N.C., Ohio, Pa., S.C., Texas, N.J., Va., Wash., and Wisc.).

    I know many agents will argue to stay away from one of these franchise opportunities and go with an agency group, cluster, network, or even use a wholesaler like Superior Access, Agent Secure, etc. When I was a captive agent my new business was 15% for many of the products and my renewals were about 10%. If I use a service like Superior Access, I would get about 9% to 12% for new business and about 7% to 9% for renewals under the superior plan. The same can be said for many of the agency groups, clusters, and networks as well, where they tell you that you 80/20 split with them, but don't really disclose to you what they get on the renewal is much less and equals to be the same as if you went with a wholesaler like Superior Access after the split. Then I am sure you can get some of these carriers directly, but you will have to worry about meeting there numbers to keep them happy and with you. Do you want to worry about keeping each carrier happy? One thing that many of these other opportunities or a direct relationships wont do for you and that is help market your agency and give you award-winning support to do so. I personally do not want to spend my time servicing or doing things that do not allow me to sale and grow my agency. I consider those a waste of my time. I have only found one opportunity, that's equal to a franchise opportunity with either Brightway or Goosehead and that is being a AAA Independent Insurance Agent in North Carolina through AAA of Carolina's Entrepreneur Independent Agent Program. The only drawback is that I still have to do service work, but there's no upfront or on going costs with no production requirements. After the AAA EIA program, I would say based on my research that Firefly Insurance is the next best deal, followed by a close tie between Oli Insurance and Agent Support Network of America.

    My questions for Brightway and Goosehead franchise owners are as follows:

    1. How has transitioning from a captive agent like with State Farm, Farmers, Allstate, etc. to this franchise model feel after being a captive?

    2. What was the rate of return on purchasing after going from a captive to an independent with either Brightway or Goosehead?

    3. Was it easier to cross-sale additional products from the start?

    4. How has the support and marketing from the franchisor been? Do you really get that award-winning support behind you to make you a success in your local area?

    5. Even though you may only have one franchise or location are you able to transact sales in multiple states, if you have your non-resident licenses?

    6. What can you tell me about your day of discovery? I'm looking forward to my day.

    7. What's the compensation plan you use with bringing on producers? Salary, hourly wage, commission, combination?

    8. If you had to do it over again, would you?

    9. What is your 3 year goal, 5 year goal, and 10 year goal?

    10. How many locations do you have?

    I look forward in hearing from the franchise owners. Others feel free to comment and ask additional questions, which I didn't think to ask the franchise owners.
     
  2. johnkearnsagency
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    Correction, Brightway is 50% on the renewals for the non-franchise and the office agent franchise options, but 45% on the renewals for the retail agency franchise option.
     
  3. johnkearnsagency
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    Correction, I spoke with a representative at Goosehead and franchsie fee is 25K, if paying in one-lump sum or 40K, if making a 10K down payment and making monthly payments till the franchise fee is paid off.
     
  4. johnkearnsagency
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    Confirmed, Goosehead split for new business is 80/20.
     
  5. andy_M
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    I should have posted this in the linked forum...which was about going from SF to one of these.

    That's a great write up. After 20+ years in tech I am switching to insurance. I initially went through the application process with State Farm, but stopped short as a couple of things were bothering me.

    1- I found out someone I knew had done an agency and got nixed at the end of the first year because there was friction between them and the regional sales lead. They were making good on the numbers but the lead was coming in and being belligerent. This is financially pretty rough to have an entity yank away your livelihood so capriciously. I've run into office bullies in tech and I vowed to never go into situation where someone like that can have position power over me ever again. This was a big alarm signal to me personally.
    2- State Farm was going to really put their thumb on me for their Life policies. I had priced these from the consumer side and they are not at all competitive. There is a youtube video of a guy who bailed on SF who confirmed my fears on this one and on other fronts.
    3- The ever increasing quotas. Stepping back and enjoying your success is frowned upon and the convoluted compensation schedule reflects that. They can change that compensation schedule whenever they want (and do) and you've got to suck it up and take it. Economy sucks? too bad- you need to sell. Have personal tragedy? (or a member of your team) too bad- you need to sell. Rates gone up? Too bad, you need to sell. They make it really painful for you to have a bad month or a bad quarter.
    4- No succession plan. If I build a giant book of business and want to pass that on to my kid when they come of age and prove themselves, I'd have to hand that 10 million in business back to SF and my kid would start from near scratch. Nor can I sell my book.
    5- a (and this is on any captive agency)- you don't work for your customers, you work for SF. When a captive carrier jacks rates or does something boneheaded, you're married to the carrier.
    5- b The one year non-compete.... yeah- while you are stuck with a commercial lease agreement, a bunch of furniture and employees you busted your butt to hire.

    I decided after interviewing a bunch of agents and starting the cert process that I do like the idea of selling insurance, so my plan now is to get my P&C cert and try and start on my own as independent. Although I know there's a lot to be gained from experience at another agency, I'm in my late 40s, don't need an immediate paycheck and I really prefer to work for myself. Not quite what you were looking for, but that' my take.

    Any tips on whether these options or others paths are a good way forward are appreciated. I know others have sought similar on the forums, but I haven't seen follow up threads on how they did it.
     
    Last edited: Mar 25, 2019
    andy_M, Mar 25, 2019
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  6. AZDave
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    For either one of these franchise opportunities, can you step me thru the sales process? I'm confused. Do you do the quote, or does someone else, or are you provided a rater? Can you immediately bind the quote? Is your agency name on the quote and on the issued policy? Does your agency hold the contract directly with the Carriers, or does Goosehead/Brightway?

    And with that, How do you get paid for the commissions?

    They both offer 'award winning' customer service, so how does the customer come to call them instead of you, the agent?

    How does Goosehead/Brightway assist in technology advancements? is there a 'buy now' button on your website? You are seeking the auto and home market exclusively?

    To give up 30 - 40% of your renewals for service work seems extreme. Many Carries offer their service centers for a much smaller price.

    Not bashing your decision, it's difficult to go truly Independent these days.

    Dave
     
    AZDave, Mar 25, 2019
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  7. andy_M
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    Also- what happens to the book of biz if you leave either?

    Same question for the Superior Access option.
     
    andy_M, Mar 25, 2019
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  8. Dreamiekid
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    I honestly don't know how you sleep at night by ripping people off.
    Superior Access is trash. Their system never work or always down for some reason. Underwriter take 2-3 or more days to reply back.

    When I open my agency, I used them and they suck. Also, they list so many companies that they write which it's also bs. They are a joke.
     
  9. BADTROUT
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    The most important part of opening an agency is to realize it is going to take a tremendous amount of work no matter how you go about doing it. There is no magic bullet.

    After that, its the systems (software, E&O, processes, commissions etc).

    You are going to find 10,000 opinions on which is the best if you search the forums and the internet in general. The most important aspects of how you access your carriers, and who you associate your agency with should be the following:

    Startup costs
    New business commissions
    Renewal Commissions
    Carrier profitability/contingency bonus'
    What happens when (if) you leave?
    Non compete?
    Vested ownership/Guaranteed buyouts

    There are many outfits that present well in several categories, but horribly in others. Much of it has to do with opinion, for instance. I want less commission, and service to be centralized versus I want more commission and I will service my own clients in house. My opinion is that if you farm out your service, and you have a non-compete you have a job, not an agency you own in the truest sense of "own".

    I think with the right amount of feedback one could make an argument to sign up with many of the groups out there, but you need to find the right fit for you.

    I've often told people, if you want to get a feel for a group, go straight to the top, don't talk to the sales guy working the beat, THIS IS YOUR ENTIRE CAREER AT STAKE... Call and ask to talk to the President of the organization personally. Ask the hard questions and interview the network from the top down. You'll have your answer.

    If you find they don't have the answers or the time, perhaps its typical of their culture.
     
    BADTROUT, Mar 25, 2019
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  10. johnkearnsagency
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    Dave,

    The franchise owner, who's the licensed principle and his licensed staff sale. Your local agency number is connected with each franchisors customer service center, so there's a seamless process when transferring a client for servicing to the service center. Of course your provided a rater. From my talks with each you have binding authority for all direct appointments. My understanding is that each franchise is a producer appointment with the carriers under the franchisors contract. As for technology, from what I can tell they both offer some technology advancements, that most agencies do not have, which makes the intergration between your agency and the customer service center and for sales and marketing top notch. They sales personal lines, commercial lines, specialty lines, and life. They both get higher commissions with most of the carriers, then most clusters, agency groups, or networks provide or even if you had a direct appointment yourself.

    If a cluster or agency group or network does an 80/20 split with you on business written and renewals, but they get 10% to 15% on new business and 9% to 12% on renewal business, aren't you only getting 8% to 12% on new business and 7.2% to 9.6% on the renewal? From my understanding, if these franchisors are getting a higher commission than you can get yourself or a cluster or agency group or network can get you that's between 15% to 20% on new business and renewal. As a franchise you would be earning 12% to 16% on new business and 7.5% to 10% on the renewal. You would basically be making the same when it came to the renewal, but do not have to deal with all servicing. The customer still calls your agency, but since your integrated with the customer service center it's like they called your staff to help them.

    The above is what helped with my decision.
     
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