Franchise Agencies

[Miguelito]

Over the years.... I can't tell you how many time I passed over this subject on this forum. Thinking it would never apply to me.

Now exploring my retirement and legacy options, I am looking at starting my wife's franchise agency. Our independent demographic was not focused on personal lines, however we have developed a small book. Along with a small FARMERS book on the market it might seem like a viable plan.

Question to the group: Of the major store front, Main Street personal lines markets, which one is the most reputable and likely to it's retain value when sold?

I appreciate your candor and experience. HIT ME!

[d's insurance store]

Pardon my ignorance, but when you use the term 'franchise' agency, are you speaking of a captive arrangement, most notably demonstrated by an Allstate, State Farm, Farmer's or Nationwide business model, or are you referencing a group type MGA relationship, where you pay an entry or ongoing fee, have access to all kinds of markets and give up a portion of your commission in order to participate, perhaps share in profit sharing bonus and have the ability to 'own' the business produced?

Without going into too much detail, the captive model usually has company approval restrictions about selling out, either back to the carrier or to a third party, so your agency value is not really controlled by you as owner. The MGA/cluster model takes the front end income in return for what is usually defined as ownership rights and frees the agency up from obtaining a wide range of appointments in order to have access to competitive markets. I believe that most of these groups have buy back agreements or allow the writing agency to sell the accounts to another agency, perhaps with an exit fee.

[Miguelito]

Thanks, "D's Insurance".....but the description of a "captive" suggests you cannot pursue the opportunity to sell outside the marketing appetite of the well known franchises. We are not speaking of the agitator class, but simply asking for the assessment of the major brands.

[gforaker]

Sorry, but it just seems that you don't understand the business. By the way, you probably mean aggregator. Your question illustrates your inexperience. Imagine going to Chevrolet, Ford or Toyota and telling them you want to start up a new dealership. You will not get them to talk to you even if you have many millions to back you up. You just don't have the track record or experience. They also wouldn't want you to open up a new dealership near an established dealer. Major insurance companies are not going to sign you as a new start up without a proven track record and a huge sales commitment.

In any case, it is impossible to "rate" insurance companies because the business is so regional and geographic. A great company in one area may be awful in a different State or line of business. Sometimes the best Companies don't sell in all States, but only in several States. I advise that you talk to your State independent agents' association to get advice on what Companies (if any) are appointing new agents and any other information they can help you with.

[Miguelito]

Thanks "goforaker" for your pompous and utterly useless comments.