Paul Davies, CEO and Founder of One Agency Real Estate Group, has forecast the failure of high overhead businesses and particularly franchises as many areas head into uncertain market conditions and economic times.
Speaking from the 300 strong Australian and New Zealand-wide group’s headquarters in Sydney today, Mr. Davies predicted that high overhead businesses will struggle in a slowing property market, where the rate of price growth for residential properties has diminished in recent months, less turnover of properties, and pressure on maintaining agents fee levels as competition to survive increases.
“Franchise offices in particular have added overheads, and may have difficulty maintaining the narrow profit margins, creating added stress to meet their high overheads,” he says.
“I believe that many offices will close. The first will be ones with the slimmest profit margins, gradually followed by many others. I would go as far as to suggest, some franchises groups, that struggle to provide a fair exchange for fees, where their franchisees cannot justify the costs, will become irrelevant and cease to exist.”
