New agency structure will rival existing lettings franchise giants

LSL Property Services - owners of the Your Move and Reeds Rain brands - is to franchise its entire network of 183 agency offices, in addition to some 120 already franchised. 

It will immediately be a rival to other franchise giants in the lettings space, such as Belvoir, The Property Franchise Group, and Winkworth.

Long-term franchise agreements have been reached for 143 of its 183 remaining branches with agreements for the other 40 branches at an advanced stage. 

A statement from the company says: “Following the completion of that exercise, LSL will become one of the largest providers of estate agency franchise services in the UK, providing services to a network of over 300 branches. All network branches within the Your Move, Reeds Rains and LSLi brands will become franchise businesses, with agreements negotiated with existing LSL franchisees and experienced former members of the LSL Estate Agency Division management team.

“This change means that branches will be owned and operated by franchisees that know their communities well and will be able to take decisions at a local level. LSL believes that this will encourage a more entrepreneurial culture that will provide the springboard for growth and create great opportunities for the staff working in the franchise businesses. The franchisee network will continue to benefit from the distribution of other products and services provided by LSL, notably in financial services.”

LSL has been driving towards becoming a more financial services-oriented company in recent years, changing the status of its agency work.

Some 1,200 agency employees will transfer to work within the franchisee network, with branch based personnel providing continuation of service to estate agency customers.

A statement by the company to its shareholders - carrying far more details than those given to the trade press - says: “Franchising owned branches allows us to rationalise central functions. These changes will take place during 2023 and 2024, delivering incremental phased benefits. We estimate that this transaction, combined with the recent sale of Marsh & Parsons, eliminates over £110m of a cost base of c.£125m supporting the Estate Agency Division with the largest reduction taking place immediately.

“ … The enlarged franchise business will be less capital intensive. Whilst there will be meaningful investment in new systems and technology to support the development of a growing franchise business, overall capital expenditure will be lower than previously, without the need to maintain an IT infrastructure to operate a large branch network and with ongoing branch refurbishment to be carried out by the franchisees.”

David Stewart, group chief executive, comments: “Today’s announcement is a significant milestone in the execution of our strategy and is the culmination of a substantial effort on the part of colleagues across the business. The estate agency franchise model is similar to our financial services network and it will make us a much simpler, more resilient business whilst opening up new opportunities to grow our Estate Agency Division. I am delighted we have been able to complete this major project and excited about the growth opportunities ahead.”