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  • Mal McCallion

Heavyweight property primate

A 900-branch gorilla just slipped its way quietly into the UK estate agency market, shutting the door quietly on its way in and trying not to look anyone directly in the eye.


The Property Franchise Group (TPFG) – already an engorged beast of brands like Hunters, Martin & Co, Ewemove and Parkers – has just doubled in size, chowing down the Belvoir Group and adding the likes of Newton Fallowell, Northwood and Belvoir itself to its already hulking frame.


Whilst this has generally been perceived almost as a housekeeping exercise, swallowing-up the industry’s lesser-considered franchise operators into one, easier-to-locate entity, it’s actually so much bigger than that – and more consequential for everyone else competing with them.


Connells Group claims 1,200 branches under its 50+ brands. That makes TPFG the second-largest estate agency group in the country – and by some distance, with these two far, far ahead of any other agency.


Ambitious organisations like Leaders Romans Group and Lomond get regular PR for their 5-10 branch acquisitions but their piecemeal growth will take them years to achieve what this deal has done at one fell swoop. The likes of Spicerhaart, Savills and Knight Frank, none are going to come anywhere close to this scale of UK operation any time soon.


It's always tempting to view franchise businesses as somewhat more marginal entities than ‘pure’, owned companies. There remains a prevailing prejudice that these franchisees aren’t ‘real’ entrepreneurs because they needed the safety net of an established brand to get them started.


However, they’re frequently in more robust health than many single-branch independents because of the economies of scale that their monthly franchise fees achieve. I know from experience that their franchisors negotiate damn hard for services – and I’d be astonished if Rightmove or Zoopla is charging them the same as they’re charging you.


With all that being said, however, there are issues with this kind of merger – perhaps none more so than internal competition. There’s been some of it already – for years, Ewemove has freely grazed much of the same turf as office-chained, erm, chains like Ellis & Co and Country Properties. Those are different business models, however; one is self-employed, minimal overheads, large patch; the other a more traditional service, with resource contingencies and a deeper local knowledge. It's this latter model that will now be doubled-up on.


Countrywide – the old one, before it went all ‘retail’ and fell apart – was always viewed with a mixture of despair and admiration as it had as many as three brands on the same High Street, all hoping to be called out to the same market appraisal. This certainly mitigated against the risk of losing the instruction – but at a significant cost, as two of the other brands did not win.


This mitigation isn’t as important for the new TPFG – more of the risk is with each of the franchisees, which also handily incentivises them personally to fight tooth and nail to beat their sibling-competitors to the deal.


Heads they win, tails they win too. This is probably why their shareholders embraced the deal whilst barely glancing up from their Financial Times.


What does it mean for the rest of the room, as TPFG munches quietly on a banana or three? In the short-term, very little will change. But, as the savings start to trickle through and the more successful franchisees are allowed to swallow the businesses of those that aren’t good enough, it’ll certainly become more of an alpha competitor when it comes to winning business.


By that point, of course, it could also have gorged on other significant franchise businesses such as LSL’s new setup – and even collected a few of the high-growth self-employed brands to go with its Ewemove operation.


Quiet the gorilla may be at present – but it won’t be too long until the jungle starts to hear a lot more noise coming from its direction. And, at that point, everyone else might just want to start paying it a little bit more attention than they are now …

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