Has Franchising Finally Arrived in Russia?
By James Logan
...I wanted to create a real estate brokerage giant for Russia/CIS that would not only set a new standard in the industry but impose the western business model of residential brokering...
The world leader in residential real estate brokerage franchising, Century21®, has now offi cially arrived in Russian celebrating the opening of its 57th outlet. Not bad for a franchising concept that was just launched less than a year ago. With plans to have more than 500 outlets by 2012, timing couldn’t have been better as we witness a boom in the Russian middle class which is a dividend from the fastexpanding natural resource sector. First developed in the 1960’s, American based Century21® today consists of over 8,500 independently owned and operated real estate offi ces and over 147,000 sales professionals in 53 countries and territories. Century21®’s market entry wasn’t short of critics, but the numbers speak for themselves and potential new franchisees are lining up to be buy into this global brand. When one thinks about franchising one thinks, “Wow, I cant afford that…I probably need to cough up hundreds of thousands of dollars just to get the license and then they’ll hit me up for tens of thousands in monthly fees”. That may be true for well known fast food chains, is but not the case for Century21®. One needs to only pay a modest $25,000 for the franchise rights and pay a franchising royalty equal to 6% of its revenues to the master franchisor based in Moscow. That can be a real value for money considering all the training, lead generation, know how, marketing and advertising that comes with the franchise package. Not only that, but as Century21 ® is a global leader in the real estate industry and has offi ces around the world, Russians trying to find a property abroad will have access to Century21® ’s global property database and the franchisee benefi ts from sales if generated in Russia. The Century21® offi ces are also offering customers mortgage brokerage services for those looking to purchase on credit. It now appears that with 57 outlets Century21® is probably one of the most successful Western franchises in Russia. McDonalds may have more restaurants, but they do not operate as a franchise in Russia: all restaurants are corporate owned. Not only has Century21® shocked the franchising community but especially the real estate community, with its many critics. Mind you, however, that Century21® didn’t come to Russia by accident, it came here as the result of the vision by the owner of the Russia/CIS master franchisor, serial American entrepreneur Nuri Katz. Mr Katz is no stranger to Russia, nor the residential real estate business, as one of the pioneers in that sector. Nuri was one of the cofounders of Evans Property Services in the early 1990’s and several years ago became a part owner of one of the leading Moscow Russian branded residential real estate firms: Beatrix. As Mr Katz pointed out in a recent Passport interview: “Owning one of the most successful residential real estate companies was clearly a serious achievement, but I wanted more. I wanted to create a real estate brokerage giant for Russia/CIS that would not only set a new standard in the industry but impose the western business model of residential brokering. My vision was to not only provide this business model for Moscow, which we have clearly achieved with Beatrix, but also to do this for the whole country and eventually in the CIS”. He has certainly done that, and not only has he become an inspiration for his industry, but he has also served as an inspiration for other potential master franchisors in all sectors. Yes! Franchising does work in Russia!! According to American Intellectual Property attorney Daniel Klein of the Hellevig, Klein & Usov law firm, this should send a positive signal to the market and and increased interest in for franchising in Russia. Keep up the good work Nuri!