Would you like to direct the "Real Estate Brand Management" of an international Real Estate Company? Would you like to be in charge of a region of 60+ million people?
But first. Does your real estate business need to be searching for, finding and moving on to the next level of doing business in the ever competitive Real Estate market?
Allow us to take a brief part of an hour to discuss our ideas for transforming your business model. And more importantly let us show you how you can help us to do this for countless hundreds of other Real Estate professionals. We will be using examples of successful companies in other business areas as well to make comparisons.
You were chosen to receive this presentation based upon your past performance, your unique location (which we shall expand on shortly) and our belief that you are the type of person and organization that can be an asset to all of those involved in creating a new real estate concept for Russia and beyond.
Our real estate model is based upon the realization of the ongoing problems of the regional real estate professional. The hit or miss cost of advertising. The cost of attracting and training new real estate professionals to your office. There is need to attract customers new to your region long before they arrive in your city. There is also the realization of the need to develop new and profitable revenue streams for you business to offset the natural cycles of growth. Finally there is the need to be ever vigilant for new and effective means of communications within your organization and with customers, i.e. new media.
Our business model is based first upon the concept of creating and expanding a real estate franchise/brand management company, of international intentions, based in Russia. The business model is also created within a framework of establishing 3 distinct "Sales Regions" within Russia and neighboring countries.
By combining forces of a number of locally owned and operated Real Estate offices, first nationwide and then internationally, we are proposing to be the solution to regional, national and international advertising costs. We are proposing to help attract and train new talent to your business. We are also proposing to establish ongoing moral boosting techniques for those employees on a continuing basis. We are proposing to have your "brand" image known quite well before a prospective client comes into your office for real estate advice.
But most importantly for this individually focused letter, as we stated at the start, we are proposing that you consider becoming the "Sales Regions Management Company".
This broad idea for a Real Estate Franchise company is not new. It has been an American way of doing business for almost half a century. Names such as RE/MAX, ERA, Century21 and Coldwell Banker are known internationally. There is also companies such as Engel & Volker of Hamburg Germany.
We wished to establish such a company based in Russia. We wish to eventually take such a company to international levels as well. Our business model differs in one very basic premise. We want "Regional Brand Management Companies" to have not only a much more hands on local control of franchising in their regions but also much more economic reward for doing this. Almost all international Real Estate franchise models have the bulk of ongoing royalty and advertising fees going directly to the international level. We propose to reverse this and place that management much much closer to individual regions and offices.
Thus for example, it is our idea to have the VillaVilla Russia East District to be in charge of the Far East, Siberia, Urals and Volga Federal Districts. This comprises an area with 71 million people.
The second region would be the VillaVilla Black Sea District to include the Southern, North Caucasian Districts and Ukraine. This comprises an area with 68+ million people.
The third region would be the VillaVilla Central District to include the Central and Northwestern Districts and the country of Belarus. this region has 64+ million people.
Regional Brand Management areas outside of Russia would include such areas as the country of France. Another area would be perhaps Spain and Portugal. A third could be Turkey. A fourth would be perhaps Greece and the Balkans -- Dalmatian Coast region.
Each of these regions would be of sufficient size to create a significant franchise system and yet within regions to take advantage of region sensibilities to be used in advertising and secondary business possibilities.
The Brand:
We have created what we consider to be a unique brand image. While being a Russian based company, we have created a brand name that is more "International" than "Russian". However this brand name would be quite recognizable to any Russian, even in English or Spanish for example. It denotes a certain "upscale" brand image that would be fitting in both the best homes in Moscow as well as homes across the entire country. The brand name evokes the same image in Spain, England, Brazil and Japan as well. It "travels" well.
We did not create "Gorky Park Realty" and hope it would sell homes in Mallorca Spain. It is however, a brand name that we feel any Russian would say "This is a Russian Real Estate Company" and say it with pride. It is also a brand and an image that most countries of the world would welcome into their business community with the same enthusiasm.
We have also put a lot of attention to the ability to spot trends in technology and new media formats in order to promote, in an ongoing basis, that brand image worldwide.
We are also aware of the ability of such an international brand to promote the creation of "cross selling" opportunities and commission sharing sources.
We believe that it is a brand image that you can feel proud to represent as one of its members and to promote the ideals that it represents throughout your region.
Operations:
We will take one region, the Russia East Region, and demonstrate the proposed model for all regional companies to follow.
First we like a city such as Barnaul as a possible headquarters for a Brand Management Company for the talent, but also because it is not a "primary" city in Russia. Based both upon the Magnit stores of Krasnodar in Russia and Walmart in the US based in Bentonville Arkansas, we wanted locations that allowed for the thinking that Real Estate is for everywhere, not just Moscow and St Petersburg. Walmart is the retailing giant that it is because it strictly avoided the major cities in the US for years. We are not advocating avoiding the cities, just the realization that there is a huge, un served and overlooked market across all of Russia. While everyone beats a path to Peter or Moscow the real base of power is being everywhere.
Magnit has 3500 stores in 1109 cities and towns across Russia. 1109 cities and towns is not just St. Petersburg and Moscow. That is why Magnit is #1 in Russia. That is why Walmart is #1 Worldwide. That is why we focus on finding towns like Barnaul and Anapa as those types of cities in which we want to have a real estate franchise presence.
With a few exceptions, almost all Real Estate Franchise companies have a basic pattern. The amounts may vary but the concept is primarily the same. The Real Estate Franchise company sells a franchise "right" to a certain territory for a certain time period with certain goals that must be met in an ongoing basis. To receive this "right" the franchisee pays the Real Estate Franchiser an initial up front fee. This is normally about $20,000. Then the franchisee also pays a "royalty fee" either quarterly or annually of approximately 6% on a continuing basis. The franchisee also pays approximately 2% in advertising fees on the same schedule. These fees are a percentage of gross commission and fee revenue for the franchisee. (One notable exception is the largest, RE/MAX which charges instead each broker a set "desk fee" monthly instead of the franchisee as a whole. The franchisee is responsible for advertising fees however. Each RE/MAX office is required to maintain a 20 person office within three years or also loose the franchise "right").
Our goal is to change this pattern. We propose to have the individual office send the initial "right" payment to the District Office. The District office then keeps 50% of that fee and sends the remaining 50% to the VillaVilla International Headquarters. The difference then becomes the ongoing annual royalty payment of 6%. This is to be kept 80% by the District Office and 20% to the International Headquarters. This percentage is also true of the 2% advertising fee. We are also considering a 1% IT/Web maintenance fee to be sent directly to the International headquarters for ongoing upgrades in software, security and communications technology advancements and training.
Our purpose for this arrangement is two fold. It keeps much of the decision and advertising process closer to the individual offices. It also keeps the rewards for expansion in that region within that region as well. It is direct incentive to continually improve the Brand Image in a regional fashion as opposed to an international fashion.
From the VillaVilla International headquarters it also is recognizing and rewarding the marketing plan that the Regional District Brand Company was primarily responsible for the initial establishment and growth of the brand image in that respective region. Thus the reward for that creation should stay within that region with those primarily responsible.
And as this is to be done in more than one region from the beginning, it is that same drive and dedication in all regions, rewarded thus, that will create, we feel, a much stronger and broadly based Real Estate Brand Image than can be done in the same time frame done from a central office. Or to start in just one region and slowly build out also wastes, in our opinion, valuable time.
As company after company has showed in this age, it is the one or two top brand images that get to market, cover the market and continually update and improve that remain one or two. Nike, Starbucks, Coca Cola, Magnit, Sberbank, VTB come to mind.
This is, we feel, a great opportunity for someone in your region, in your industry, to make not only a difference personally, but make a difference to countless employees, franchisees and future customers in a way not presented before.
It is our hope that you will join us in not only creating such a brand image but in creating a source of wealth and satisfaction for yourself and your fellow citizens.
We look forward to your comments and our continued discussions of this concept.
