I was looking at the different business models for real estate...

I was looking at the different business models for real estate agents now in Australia : independent operations, franchise and The Agency.

It does not seem that one model is much better than the others :
- The Agency model looks interesting for agents as they get a higher share of commissions and the costs are born by the head office. But this model does not look that great for shareholders (so far*), who gets a lower share of the commission and a company which is now loss making and bearing debt.
- Independent operations is interesting as it allows to get the full effect of the operating leverage, but is very volatile so requires to have a very low level of costs to remain profitable at the bottom of the market (property management business enough at the bottom ?),
- Franchise operations (apparently 50 % of the market) may be an interesting compromise as it allows the franchisor to have very low costs and revenues from franchisees (based on their own operations).
It does not seem the best model for agents who get only around 50 % of property transaction commission (vs 60 % when with independent and 75 % with The Agency, according to a presentation of The Agency), unless the agent is also the franchisee.

Overall, the existing model of MEA, mix of own operations and franchise, may be the best model, as it gives some operating leverage (thanks to own operations), but limits the downside risks (thanks to franchise).
However, it is not clear if this model will work in the long term, as franchisees can exit at the end of their contracts. They have different options at the end of their contract : stay with MEA, go with another franchisor or become independent.

* interesting also to note that their main shareholder has been increasing his holding in September and AU1 is now at 52 weeks high