Is Opening an Agent Franchise Profitable?

KeithIns

New Member
2
I have been exploring what it takes to be successful in opening an independent agent franchise and I am having a difficult time figuring out how it would work financially, given numbers that are out there.

I assume one is paying a $25,000 to $40,000 franchise fee, which is what Goosehead charges, and must open an office/store front of some type. I assume that operating the office and T&E to wine and dine loan officers and other sources of referrals, which appear to be absolutely critical to the business, is $3,500 a month.

If I assume 20% commission and 11% fees it would take an annualized run rate of $169,000 to break even on a monthly basis. Profitability would kick in the first month of renewals. However, I suspect that new franchises, particularly those without industry experience and contacts would be much less.

I know that Goosehead and Brightway are competing hard for franchisees. Goosehead is adding a lot. I have no clue how many fail. However, if my numbers are correct, it looks like an extremely difficult haul unless you are coming into the business in a state that allows fees and have a natural 'in' with a source of strong referrals.

What am I missing in the model? Either producers are doing more business than I think is likely, or it is hard to see why they go into the franchise business, particularly given the up front fee.
 
Well have you looked into using a Cluster instead it would greatly relieve a lot of the financial burden and costs opening it up to purely just a matter of finding business. I thrown together a rough 1 man shop using just a cluster and I have come to nearly $3000 in total monthly expenses with rent being about half!
 
MikeR has it right. That big up front fee you referenced would be alot more profitable to you if used to hire staff. Same services they provde, carrier access, etc, can be had from other providers with much better terms.
 

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