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What Is The Berkshire Hathaway HomeServices Franchise Cost?
Have you ever thought of opening your own real estate brokerage franchise network? In this article, we’ll take a look at Berkshire Hathaway HomeServices franchise cost and tackle the training and obligations you need to comply with.
Franchise Description
Before we discuss the Berkshire Hathaway HomeServices franchise cost, let’s learn a bit more about the company. This real estate network consists of a myriad of players – from first-time buyers to big-time real estate market players and everyone else in between.
BHH Affiliates, LLC franchises the business, which began in 2012 and started franchising in 2013. The head office is in Irvine, California, and they have around 1,445 units.
If you decide to franchise this real estate business, you’ll need to run it from an office or various offices. The venture will exist under the franchise’s name. Added to that, the franchise owner will have real estate sales associates. For these partners, the franchise owners will promote and support a referral system, a customer system, as well as ads and PR.
Training Overview
Aside from the Berkshire Hathaway HomeServices franchise cost, the franchise owner also needs to prepare for training and other learning courses. Within 45 days after the Franchise Contract date, the franchise owner needs to hold an orientation. This is required for all the sales personnel. The franchise owner will have to provide the venue for this training and pay for all the costs and expenses.
Aside from the first training, the franchise owner will also need to offer on-going and other training courses. These may be self-study, recorded and live virtual training, live teacher training on location, web-based training, video training, or in-office courses. The franchise owner could also hold training along with annual sales meetings and other network events and programs.
Obligations and Restrictions
It’s also crucial to be in-the-know about the duties of opening a Berkshire Hathaway franchise. For instance, franchise owners should appoint a real estate broker who will manage the business by state laws.
There are cases when the franchise owner is a corporation, a partnership, or an LLC. In such a case, each owner must sign a non-disclosure, non-compete, and non-transfer contract and personal guarantee.
Added to that, the business requires franchise owners to only offer services that are approved by the head office. Franchise owners must also only offer services shown in the manual and the franchise contract.
The head office does not grant an exclusive area to its franchise owners. That said, franchise owners may compete with other outlets and fellow franchise owners. However, both parties may agree to a contract clause naming a guarded area.
As for the term of the contract, the first franchise term is ten to fifteen years. The head office and the franchise owner jointly agree upon this period. However, the franchisor does not offer renewal rights.
As for fiscal aid, the head office may finance a part of the initial franchise fee. Other than that, the head office does not grant direct or non-direct funding. In the same vein, the head office does not assure a lease note or obligation.
Berkshire Hathaway HomeServices Franchise Cost
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Franchise Fee | $25,000 | $25,000 |
| Sales Professional Orientation | $100 | $500 |
| Exterior Signs | $1,000 | $20,000 |
| Stationery and Related Supplies | $2,000 | $5,000 |
| Yard Signs | $5,000 | $10,000 |
| Grand Opening Advertising | $5,000 | $5,000 |
| Computer Hardware | $1,000 | $4,000 |
| Approved Broker Management System (computer software) | $3,000 | $5,000 |
| Approved Software Support Expenses | $100 | $1,000 |
| Business Class Telephone Service | $20 | $50 |
| Business Class Internet Access | $50 | $300 |
| Real Property (whether purchased or leased) | $0 | $6,000 |
| Furniture, Fixtures & Equipment | $0 | $5,000 |
| Business Insurance | In excess of $1,000 in most cases. | |
| Agent Commissions | Prevailing commissions in the franchisee’s geographical area. | |
| Additional Funds – 3 months | $30 | $525 |
| ESTIMATED TOTAL | $43,300 | $88,375 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Continuing Royalty | Declining percentage of gross revenue or, after the first year of operations, the greater of the stated percentage of gross revenue or $15,000. |
| Marketing Fee | Declining percentage of gross revenue, with a monthly minimum of $500. |
| Referral Fee | $750 to $7,500 |
| Additional Location Fee | $2,500 |
| Restricted Purpose Location Fee | $1,000 |
| Sales Convention Registration Fee | Standard registration fee for 1 person: $569 to $600. |
| Examination Fee | All costs incurred by the franchisor in connection with the cancellation, by the franchisee, of an examination of the franchisee’s books and records or a finding of an understatement of gross revenue. |
| Indemnification | Will vary based on circumstances. |
| Attorney’s Fees | Will vary based on circumstances. |
| Fees Connected with Cure of Defaults | Costs incurred if the franchisor cures a default for the franchisee. |
| Late Fee | 12.5% per annum or the highest rate permitted by law, whichever is lower. |
| Transfer Fee | $5,000 |
| Transfer Fee (with public offering) | $10,000 plus reimbursement of all of the franchisor’s expenses including legal fees. |
| Optional: Orion Commercial Real Estate Subscription Fee | $3,000 per year payable to a third party vendor. |
Did You Know?
Here are a few fun things to know about Berkshire Hathaway HomeServices:
- Berkshire Hathaway Inc. Chairman and CEO Warren Buffett once stressed how crucial real estate decisions are. “When people are making the decision of the magnitude of buying a house, it’s the biggest decision a great many families will ever make,” Buffet once said. He also said that a stellar name is crucial. “They want to know who they’re working with, and we think that the Berkshire Hathaway name will be reassuring to many of those people,” he added.
- Speaking of standing, Berkshire Hathaway is a well-respected brand in real estate. And they have the awards to show for it! In fact, they won “Real Estate Agency Brand of the Year” as well as “Highest Ranked in Trust and Love” in the 32nd annual Harris Poll EquiTrend®study. This is the brand’s third time to be hailed Brand of the Year. They also got the same award in 2014 and 2018.
- The brand takes pride in building trust, integrity, stability, and the highest work standards to its clients. That said, they do their best to ensure that every office reflects this promise.
- It’s not all about money for Berkshire Hathaway. Besides great service, they also take honor in helping the community. In fact, they embrace the Sunshine Kids™ Foundation as its benefactor. This charity group works to offer social as well as emotional support for children with cancer.
If you’re ready to shoulder the Berkshire Hathaway HomeServices franchise cost and you can handle the duties attached to it, then opening a franchise can be a good investment.
To get more franchise-related information, check out franchise guides here at Franchise How!