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Mortgage Broker News | 14 Aug 2014, 10:35 AM Agree 0
Former bank employees continue to flock to the mortgage broker industry, with the latest defectors finding a new home with Canada’s largest broker network after gaining experience with a rival network for a year.
  • Ron Butler | 14 Aug 2014, 11:25 AM Agree 0
    Another score for Gary, congrats.
  • Gord | 14 Aug 2014, 12:11 PM Agree 0
    Amazing... this is news!!
  • Michael A. | 14 Aug 2014, 12:20 PM Agree 0
    Congratulations Denova Group. Welcome to DLC.
  • Ranjit Dhillon Centum Mortgage Smart | 14 Aug 2014, 01:09 PM Agree 0
    I am myself an Ex Banker, but I have noticed these days, Bankers see 'the grass on the other side of the fence' too green ...and some of them have come to the Broker Market but have not noticed much success as it very different selling themselves compared to the Banks where the customer goes to the Logo not the employee who is dealing with them. I had some ex bankers joined me as an agent but only few are successful!
  • Ranjit Dhillon Centum Mortgage Smart | 14 Aug 2014, 01:10 PM Agree 0
    I am myself an Ex Banker, but I have noticed these days, Bankers see 'the grass on the other side of the fence' too green ...and some of them have come to the Broker Market but have not noticed much success as it very different selling themselves compared to the Banks where the customer goes to the Logo not the employee who is dealing with them. I had some ex bankers joined me as an agent but only few are successful
  • banker | 14 Aug 2014, 01:33 PM Agree 0
    why do we care?
  • Independent broker | 15 Aug 2014, 10:23 AM Agree 0
    I neither work for MA nor DLC. Ranjit is right. DLC have been offering 6 figure signing bonus to top groups and promises they will build their team to a certain volum level. unfortunately they bring only a small fraction of what they commit to the table.
  • Ron Butler | 15 Aug 2014, 10:29 AM Agree 0
    I am not being critical of anything said here, people are entitled to their opinions. I believe as a site about our industry; MBN has a right to run what amounts to "announcements". That seems fair: "Welcome to.........." "Congrats on.........." it does not all have to be hard news. Can't it just be that............ an announcement.
  • Six Figures | 15 Aug 2014, 11:19 AM Agree 0
    I don't know who is smarter - those offering these six figures or those taking it. I do know who gets out-smarted.

    It seems pretty obvious that any broker firm that takes an upfront payoff is merely getting a fraction of the tax collected by the Franchisor over time. Clearly the folks at DLC are not idiots and earn many times more than the upfront fee offered to the Broker from the 5% royalty they collect over the 7 year Franchise contract.

    Nothing wrong with this, the broker gets a little payola and DLC "buys" a new loyal customer, right?.

    It seems win/win - except for one potential problem. This faustian bargain might be paid for by the unwitting mortgage agents that end up paying the 5% tax that funds the initial payola to the broker - and profit to DLC.

    I am on a 90/10 split with my broker (with select lenders) and I take comfort in knowing that my split is transparent and calculated on 100 cent dollars. If a dollar of commission comes in from a lender I booked a loan with, I get 90 cents. That being said if a 5% royalty were taken right off the top then I would be getting a 90/10 split on 95 cent collars. This means my effective commission split is only 85/15 approximately.

    Now I have no problem with DLC or anyone providing signup incentives to "buy" growth. What I would have problem with is my Broker owner binding me and my colleagues to a 7 year tax so she can earn a little payola that me and the other 15 agents pay for year after year.

    And then claim that I am on a 90/10 split.

    I'd rather she just asked us and if needed we lowered our commission splits to 85/15 and she invested in her mortgage operations so all of us could enjoy the benefits.

    Thankfully I work with the best Broker in the business - IMHO
  • Ron Butler | 15 Aug 2014, 11:36 AM Agree 0
    We have all seen this commissions split / up front payment / advertising fund discussion before many times before and at great length. In the end it's just a business model and it seems to work for a lot of mortgage brokers (definitely not for our company) so it's clear that there actually IS transparency because it has been discussed a 1000 times. It's a decision each brokerage, each broker and each agent makes on their own, no one held a gun to their heads. Everyone can pick their spot because virtually nothing stays a secret in this business for long.
  • 1001 times | 15 Aug 2014, 11:52 AM Agree 0

    I have not heard of any of the mortgage agents working with a "paid" broker firm being party to the contract discussions or privy to the payola funds. Maybe if each agent shared in the discussion AND the spoils - then this could be called "their own decision".

    Waited - I stand corrected. I know of at least one case. Our Broker involved us in the discussion and the math, and we all decided for our company. So I guess you are right - at least in our circumstance.
  • Ron Butler | 15 Aug 2014, 12:11 PM Agree 0
    @1001 times............ the agent may or may not be in the loop of the exact incentive to join the broker owner received, although it is very highly publicized so you have to be in a bubble not to know but set that part aside; the agent knew EXACTLY what the splits and the costs were, they understood the length of the contract and they are free to say yes or no.
  • 1001 times | 15 Aug 2014, 12:53 PM Agree 0
    your right - the agent could leave if they didn't like the deal and the tax imposed on them
  • Paul Therien - CENTUM | 15 Aug 2014, 01:25 PM Agree 0
    I find the direction that the thread for this article has taken. For me, as a brand leader, the most interesting part appears to be the misconception from some people about what being a part of a large network means to an agent, or a business owner. In any industry that has franchising people who join a brand do so for specific, and not-so-specific reasons. A franchise organization in our industry typically will offer a lineup of technology products that would otherwise, in some cases, be too costly for an independent. In addition to products there is training offered, access to unique product offerings (consumer loans, credit cards), unified national branding and most importantly – support. Independents fill a niche, but without the support of a larger organization, it can sometimes feel like you are an island off by yourself. When something goes wrong, who does the business owner turn to for support, moral and otherwise?

    Dominion Lending Centres has done an excellent job of building a business, as has Verico, Mortgage Alliance, Mortgage Architects and others – and of course CENTUM! We each fill a niche in a growing industry that is continuing to see much flux and although the folks at DLC and other are my competition – I have nothing but respect for each of my fellow brand leaders. They have all accomplished much and continue, like I do, to look forward and help elevate mortgage brokers in the eyes of the consumer. There is room for all of us, because we all offer a different culture and that culture is what drives any franchise organize or network.

    All brands offer training and technology, but at the end of the day what drives loyalty and commitment is culture and the support that our franchisees, network members, and business partners receive. At CENTUM we take great pride in the accomplishments of our partners, franchisees, and agents. At CENTUM we are a multi-generational organization, with children now taking over the business from their parents. We are owned by the Charlwood Pacific Group, Canada’s most recognized franchise organization that owns or owns the rights to some of the largest brands in the world in Real Estate, Travel, and others – and a family owned business. Martin Charlwood, our CEO, once said that we were a family owned business of family owned businesses, and he is right. We believe that the people who are a part of CENTUM are not network members, they are members of a family and they ARE our brand.

    Does being a part of a large brand offer some challenges, of course, nothing is perfect. But for me, and for my family of mortgage professionals, we work together to solve those challenges. That comradeship, teamwork, and support is why people join brands. Is it worth 5%? Yes it is.
  • Paul Therien - CENTUM | 15 Aug 2014, 01:28 PM Agree 0
    I re-read my comments and wish I could edit... So many typos... shame... Please forgive folks!
  • Bob | 15 Aug 2014, 05:08 PM Agree 0
    Dear @Ron Butler or @Gary Mauris, is this calculation and Statements are correct? Please correct me if I am wrong!
    Let’s take a DLC team of $200 Million with 60 Mortgage agents.

    •60 Agents x $150= $9000 per month x 12 Months x 7 years= $756,000 + HST contributed to the DLC marketing fund.

    •Unlike Re/Max or Royal Lepage, the DLC Marketing fund is not a Trust account, only Gary and DLC decides how and where the money has been spent. Brokers or a committee selected by brokers do not run DLC marketing fund!

    • DLC franchise pays 5 BPS+HST to DLC head office (5.63 BPS)

    • DLC franchise must hire own staff to do their own Payroll and compliance (Average salary of $40,000).
  • Ron Butler | 15 Aug 2014, 05:30 PM Agree 0
    @ Bob, Mr. Mauris is more than capable of answering for himself, all I ever did was file a simple note of congratulations on the addition of a new team to a successful network yet for some reason there is an element in this industry who rarely ever use their real names on a blog or news board who want to snipe and dig at every single thing one network or another does. For the life of me I don't get it.
  • Realtor, again | 17 Aug 2014, 02:50 PM Agree 0
    Paul. I agree that working with a large franchise brand is not perfect. The jury is back on this issue in the real estate market. I havnt seen many new realty offices popping up and I never hear of one selling. 

    Since you brought up the topic lets use as an example century 21.  I think everyone would acknowledge that real estate offices rarely sell and when they do they have a very low valuation and price. There are multiple reasons for this, some of this relates to the nature of the business and some relates to the nature of franchising. 

    On the later, the local business owner - or franchise operator in this world - leases their business name and logo from the franchisor.  It is this leased business name and brand that is promoted to customers and worn as the prime identity by the sales agents for decades. And of course this asset is owned by the franchisor and not the franchisee. Consequently the "operator" spends decades building a local market business value in a brand they do not own and cannot value and sell when the time come. What would a buyer be purchasing.

    Typically the local franchise business profits are taxed from the franchisee to the franchisor in the form a percentage "royalty". 

    So profits duing the many years if operation are compressed as well as the value at the time of resale

    Proof of concept ?

    Presumably the collective of century 21, Sutton or re/max real estate office across canada have very little resale value- if each has very little value independently- then the many has the same fate.

    This is the "zero" value multiplied by many offices rule. Zero times anything still equals zero- value that is.

    Regardless of the low resale value of individual and/or aggregate real estate offices across canada each of these franchisors brands enjoy multimillion dollar valuations. Ad funds n royalties drive it.

    Note that realtors got wise. Do you see any Canadian advertising for royal league, sutton, remax, century 21 on tv. No. Because the ad funds were not supported or valued by realtors.

    Google Mr Charlwood or Mr Shaw or Mr Polzler. They remains Some of the wealthiest people in canada. They didn't do it by being in the real estate business as realtors or real estate broker owners. They did it in the franchise business as century 21, sutton and re/max.

    Then. Google the name of any of thier franchise operators. Find any? Didn't think so.

    So as a real estate broker owner our industry was set. Not too many alternatives. But mortgage brokers still do have a choice. Pursue business ownership with your own logo or spend your career being a franchise operator. Who do you want to benefit from your business success, your family or your franchisor?

    Ps. The insult/ irony is also paying into an advertising fund on top of the franchise royalty in order to promote the logo or brand assets owned by a francise corporation you don't own.

    Support your national and local industry associations and join and support true business networks that provide the benefits of national scale and networking without the hazards of being franchised.

    Build your own name, logo and reputation. Don't lease someone else's.
  • Alta Broker | 18 Aug 2014, 02:45 PM Agree 0
    Realtor again,
    These are the best points in this thread.
    This a relationship business. Brand yourself.
  • Realtor again | 20 Aug 2014, 11:50 AM Agree 0
    I certainly experienced that. Years ago Mortgage Centre Franchise kept the logo - and then my phone and fax numbers and my website address. Finally it got down to them wanting my customer list

    I have been staunchly independent for over 10 years - and with the Verico business network half that long. But no franchises for me ever again.

    Not saying it isn't right for some newer teams entering the industry. Just my opinion and experience.
  • Paul Therien - CENTUM | 25 Aug 2014, 02:41 PM Agree 0
    @ Realtor, Again

    People join a franchise organization for a variety of reasons, brand being one of them. Yes they lease the name from the owner of the brand, but that is exactly the point of a franchise. You receive national branding at a fraction of the cost of attempting to build it yourself. You also receive support, and are able to reach a broader customer, have greater learning and networking opportunities, etc. It is not all about marketing. A brand is about far more than a logo and television advertising – ask any branding expert. It is about the experience that someone has with that organization. From employees, to franchise owners, to lender partners, to the consumer.

    We actually have several examples in all of the brands managed by the Charlwood Pacific Group where the franchise was sold, at a good profit, to a new buyer when the franchisee decided he/she wished to exit the business. Just because you do not see these being advertised, does not mean that they do not happen. With CENTUM as we had a franchisee sell their operations to a credit union, and that is only one example of many. To say/claim that in all situations there is no value is simply untrue.

    If you want to look at Century 21 and why people join the brand, why they are growing year over year. It is simple. They are the single largest real estate brand on the planet with over 150,000 realtors - and the most recognized brand in the world. That brand gives consumers confidence knowing that they are dealing with an established and reputable company.

    Is Mr. Charlwood wealthy? Sure. BUT - the thing to consider however is that in franchising the “owner” of the brand is ONLY successful if the franchise owners are. Mr. Charlwood would not make a dime if his franchises were not earning money, and if they were not… they would not renew. At a renewal rate of just shy of 95% over the past 40 years, well – that speaks for itself.

    We, as a franchise organization, have a vested interest in seeing each of our franchises succeed, and we take that responsibility seriously. We provide resources that would otherwise be cost prohibitive to an individual operation, and we are there if and when they need us. We have proven that the support we offer creates results – we know that what we offer is valuable and has meaning to people. Our franchises are more than our partners or our customers, they are a part of a family. Our franchisees and their agents ARE our brand. They are the reason for why we come to work each and every morning, the reason why we are successful. They are the most important people in our business, and they are truly a part of our family. We have examples of franchises that have been owned by multiple generations of a family, and it is why we have always said that we are a family owned business of family owned businesses.

    We actually have several examples in all of the brands managed by the Charlwood Pacific Group where the franchise was sold, at a good profit, to a new buyer when the franchisee decided he/she wished to exit the business. Just because you do not see these being advertised, does not mean that they do not happen. If you do not see something, does it automatically mean it does not exist? No, of course not.

    With CENTUM, a franchisee sold their operations to a credit union, one that was so profitable for them that they recently bought it back from that same credit union. That is only one example of many. To say/claim that in all situations there is no value is simply untrue.

    As I said in my previous post, franchising may not be for everyone, and that is OK. I have never suggested that it is. For some people being an independent is the right choice, and I applaud anyone who takes the initiative to start their own small business. The reality is however that franchising has been a proven model around the world, in almost every conceivable industry. To so easily dismiss it is folly. Just because you don’t like something doesn’t mean that it is bad, or stupid… it simply means that you personally do not like it. To attack a brand, or worse yet the person who invested their lives in building a brand, is unprofessional – and unnecessary. If your point cannot be proven with resorting to those tactics – to me – your argument loses credibility.
  • M. Robertson | 25 Aug 2014, 03:02 PM Agree 0
    Paul - THANK you for responding, I was wondering if you were going too.

    It never ceases to amaze me at how people post such passive aggressive comments on here, and in some cases outright nastiness.

    There is a distinct different to expressing an opinion with a mature, level headed approach and doing what this person... who won't even put their name (Realtor, Again) has done.

    If this individual had actually done some research and not just shot off at the mouth (so to speak) they would have never made the comments about Gary Charlwood that they have. That man has done some amazing things in his life, and has helped (literally) thousands of people around the world build successful businesses for them and their families. I would guarantee that it is more than they (Realtor, Again) have ever, or will ever, do. They would be better off taking a page from Mr. Charlwoods playbook and learn how to build a successful business than wasting energy bashing him.
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