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.
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.