Franchising Comes to Moscow

Century 21Hunt said a lack of transparency and licensing could prove to be challenges.
With the launch last week of Century 21's operations in Moscow, real estate franchising appears to have arrived in Russia. Real estate agency Miel announced days before the launch that it would license its name and franchising rights to 150 individual agents, and Hirsh has sold rights to over 60 since 2003.

In recent years, real estate franchising has changed the face of developing markets. Bill Hunt, the senior vice president in charge of international operations at Realogy, Century 21's parent company, oversaw the firm's Chinese expansion.

In town for the launch of Century 21-Russia, Hunt spoke about the prospects for real estate franchising in Russia.

Many say franchising won't work in Russia, with the lack of transparency. Why do you think it will?

You hear the same thing in every country: My country's different; franchising won't work here. But in a few years, Century 21 becomes a strong player in every market. You bring in good real estate brokers, teach people how to be good salespeople, offer service guarantees, and the system works.

You saw real estate franchising take off in China. What parallels do you see between China and Russia?

There are several. The maturity of the markets is similar -- they're still young, still creating rules and regulations through the government. You can work with the government and with the countries' real estate guilds to strengthen individual businesses and create ethics.

Where has Century 21's greatest success been?

France, where Century 21 now has 900 offices. Seventeen years ago, the industry was disorganized. The change has come thanks to one thing: the concept of using franchises. You see rapid market development thanks to individual developers that wanted to compete.

In Japan, Western programs were brought into a culture that wasn't ready. When we went in there, it was considered a disgrace to sell your house -- houses were passed down between generations, and if you were selling your house, you either had marriage problems or were in financial distress. You'd go to a realtor three or four towns away, there wouldn't be any For Sale signs, and you'd invite potential buyers in for tea as if they were guests. Now, though, they've taken Western methods and have made them the traditional way of selling real estate in Japan.

What is the biggest challenge specific to Russia to developing franchising?

The lack of transparency. With franchising, there isn't a product you're selling that you can keep track of, and a lack of transparency will be difficult here, as in Asia and Latin America.

In Indonesia [as in Russia], there was no government licensing. We created an in-house licensing and training program.

How does Century 21 feel about entering the Russian market?

We're extremely excited to enter the market; there's a lot of wealth out there. It will be the sixth- or seventh-largest market for us. We didn't feel the market was ready before, but the country has now emerged impressively from its financial crises.

Russia is the most expensive market in the world today. Real estate is cyclical, markets change, and we'll be there.

Why did you go into real estate franchising?

I wanted to be at the cutting edge of change [laughs] and work with new people. I fell in love with China and married a Chinese woman.