Hey everyone. I'll cut right to the chase. I'm a wholesaler in the Seattle area and I'm looking for a way forward.
I have been operating as a franchisee of one of those home buying outfits for the last 2 years and quite frankly I'm unable to make the business model work right now. Based on the overall analysis of my business, the key problem is cost per lead. When the leads come in, we can close them at a consistent rate, but since I got started, the average cost per lead (through our exclusive advertising partner) has essentially doubled, with a lot of volatility over time. It's very difficult to build a business model around this volatility. I'm being careful not to talk bad about about the company here. In a lot of ways it really works. The bottle neck is affordable lead generation, and my hands are essentially tied as far as alternative ways to generate lead flow, due to exclusivity agreements and such.
It's a real shame, because nearly every other aspect of the business is really great. I have a lot of good contacts and love the business. My buyers say I bring them good deals and they really want me to keep feeding them. I treat my sellers well, and they write me recommendation letters. The problems is I don't see a way forward without significant recapitalization.
Is anyone else having this problem? What am I missing? Who should I try to reach out to?
If other franchisees are having similar issues, get organized (don't know how hard that would be to do - I suppose things can get competitive) and approach the business and advertising partner about it. Offer alternate terms that are fair but perhaps based on the quality of leads or ultimate success rate or something. Ultimately they don't make money if you don't. Or, there has got to be more than one of these "we buy horses" organizations around to associate with.