An exodus of franchisees from EweMove has been revealed.
Ian Wilson, CEO of the Property Franchise Group which acquired the business last year, told EYE that around 20 have either left the network or are in the process of leaving.
He said: “When we bought the business, they felt they had been sold down the river.
“They believed EweMove stood for everything that was not corporate, and they did not like it that the founders should have sold out to a plc, while pocketing millions.”
EweMove, bought for £9m last September, lost £300,000 on revenues of just £900,000 in the first half of this year, while the two founders left in June.
It is now forecast by broker James Fletcher at Cenkos that the loss will be cut to £100,000 on revenues of £1.8m in the second half of this year.
Is this in line with Wilson’s own expectations when he bought EweMove? “We had expected it to grow faster, and the churn has certainly been more than we expected.”
He said that because of the disillusionment, it had been important to try and recruit a new managing director ‘from the flock’.
Wilson said that Nick Neill, the York franchisee, had been the best performing ‘shepherd’. He had also stood up to exacting selection procedures at a time when Wilson was also recruiting managing directors for Martin & Co and Xperience.
Wilson said: “We had 120 candidates for the three roles, and I did 26 back-to-back interviews over four days.
“The applicants included four ex-directors of Countrywide, and others so high profile that they said they could not be seen coming into the London hotel where I did most of the interviews because they did not want to be recognised.”
An immediate goal is to reverse the exodus from EweMove – which Wilson said had had the benefit of leaving the best-performing franchisees.
Wilson said: “One of the glaring problems has been a total lack of support for new franchisees. That is totally unacceptable. We are implementing programmes of training, which will include going back to existing sheep and doing refresher training.”
He said that previous owners David Laycock and Glenn Ackroyd had burned through £200,000 in about four months on a recruitment drive – but this had not yielded results. Wilson said he felt this was because the pair had not really wanted to depart from their original vision of recruiting people from a non-agency background.
Traditionally, Wilson said, the mix of franchisees has been 95:5 in favour of people with no agency experience. He wants to get this to 50:50 as soon as possible, and eventually to 25:75.
There will, be says, be a major recruitment campaign “which will fish where the agents are”.
He added: “We are also aware of a churn of Local Property Experts from Purplebricks. We are specifically targeting them, using social media with messages such as ‘We’re sorry it didn’t work out’, and asking them to consider us.”
Wilson said: “It has become very difficult to sell a high street franchise, and easier to sell an online or hybrid.
“However, one of the problems in today’s market is the length of time it takes to sell houses, which means that for a new franchisee, it is likely to be six months before they start generating revenue.
“We are therefore paying new EweMove franchisees on listings, at £250 each.”
Wilson believes that in terms of listings, the online/hybrid sector has 7% market share: “It is less clear when it comes to sales because of lack of data, but we think it is about 6-7%.”
He believes the future landscape will pan out to two big players, plus a main ‘challenger’ and then a tail.
He also believes the big two could be Purplebricks and EweMove, but adds: “The real disruptor will be the online agent that offers a refund if they don’t sell your house.
“That will be the game changer.
“EweMove of course don’t need to do it, because it operates on a no sale, no fee basis.”
Does he regret buying EweMove? No.
Will he change its name? No.
Was his due diligence at fault? “No. We were aware of problems.
“For example, Glenn and David dealt with under-performance by cutting the amount of money that the franchisee had to pay.
“We deal with under-performance by turning it around into performance.”