NextHome Franchise in 2024: Costs, Fee & FDD
Explore NextHome’s innovative approach to real estate franchising, with insights on costs, fees, growth, and support. Discover if this tech-driven, client-centered brokerage is the right investment for you in today’s competitive market.
Table of Contents:
NextHome is a progressive real estate franchise that combines cutting-edge technology with a fresh, client-centered approach to the brokerage industry. Founded by James Dwiggins and Tei Baez, NextHome launched in 2014 with the mission to modernize the real estate experience for agents and clients alike. Known for its distinctive orange branding and focus on community engagement, NextHome has quickly established itself as an innovative player, striving to empower agents with tools that streamline transactions and enhance customer service.
NextHome’s core offerings revolve around residential real estate brokerage, with services covering buying, selling, and property management. Additionally, the franchise provides marketing tools, mobile-friendly technology, and a variety of resources to help agents build strong relationships with clients. NextHome’s target customers include homebuyers, sellers, and investors who value a tech-savvy, personable approach. The brand has been particularly successful with millennial clients, who appreciate its modern, transparent, and easy-to-navigate process.
With over 600 locations across the United States, NextHome has built an impressive network of agents and offices in just a few years. The franchise continues to grow rapidly due to its unique value proposition and commitment to innovation, serving thousands of clients daily. While NextHome currently operates exclusively in the U.S., its forward-thinking model and high customer satisfaction ratings have made it a well-regarded brand nationwide.
NextHome franchisees benefit from a comprehensive support system that includes training, marketing resources, and access to proprietary tools. New franchise owners undergo initial training on real estate best practices, technology use, and client relationship management, ensuring they’re well-equipped to succeed. The franchise also provides ongoing support and hosts annual events that allow franchisees to connect, learn, and stay updated on industry trends. This focus on community and innovation makes NextHome an appealing choice for entrepreneurs looking to make an impact in real estate.
Nexthome Franchise Insights
- With a relatively low franchise fee and flexible setup options, NextHome offers an accessible entry into the real estate industry, particularly appealing to entrepreneurs seeking a cost-effective investment.
- With 601 franchised units and no corporate-owned locations, NextHome focuses on empowering franchisees and building a strong nationwide network.
- NextHome’s modern, user-friendly tools and transparent process have attracted millennial clients, who make up a significant portion of today’s homebuyers.
- Known for its bright orange branding and focus on community, NextHome has quickly gained recognition and trust in local markets across the country.
- Since it began franchising in 2014, NextHome has exclusively grown through franchise locations, underscoring its commitment to supporting independent operators.
Nexthome Franchise Key indicators
Growth YOY (%)
5%
vs industry 4%
Total U.S. Franchised Units
601
3-Year Failure Rate
17%
vs industry 16%
How much does it cost to open a Nexthome franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Nexthome franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Nexthome franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a Nexthome below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $4,500 | $8,750 |
| Office Lease | $1.50/sq ft/month | $2.00/sq ft/month |
| Construction, Remodeling, and Leasehold Improvements | $0 | $50,000 |
| Equipment, Computers, Decor, Furniture, Fixtures, Decorations | $500 | $25,000 |
| Office Supplies, Brochures, Stationery, etc. | $500 | $4,000 |
| Signs | $1,000 | $4,000 |
| Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses | $500 | $3,500 |
| Insurance | $1,500 | $10,000 |
| Dues, Licenses, and Permits | $1,000 | $4,095 |
| Other Pre-Opening Expenditures | $1,000 | $5,000 |
| Additional Funds (3 to 6 months of operation) | $5,000 | $100,000 |
| Total Estimated Initial Investment | $16,250 | $220,345 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Nexthome franchise, the required capital involves both the initial investment costs and a net worth requirement set by Nexthome. Let’s take a closer look below:
- Initial Investment As shown above, the total estimated initial investment ranges from $16,250 to $220,345. This includes all the startup costs such as the franchise fee, real estate, construction, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets While NextHome doesn’t publicly specify a minimum liquid capital requirement, it’s generally estimated that you’ll need around $20,000 to $50,000 in liquid assets. This ensures you have sufficient cash on hand to cover startup costs and sustain operations during the initial phase.
- Net Worth An estimated net worth requirement for a franchise in the real estate brokerage industry is typically between $50,000 and $150,000. This financial stability demonstrates your ability to support the business as it grows.
How much does a Nexthome franchise owner make?
Calculating the salary of a Nexthome franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Nexthome franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Nexthome Revenue & Gross Sales
NextHome does not disclose specific financial performance figures, such as median gross sales. However, the brand’s rapid expansion to over 600 locations since 2014 suggests a strong market presence and demand for its services. NextHome’s focus on technology, customer-centered services, and affordable entry costs has likely contributed to positive performance for many franchisees, especially in competitive real estate markets.
Which key factors impact the average revenue performance of Nexthome franchisees?
The performance of NextHome’s U.S. franchisee median gross sales over the past year was likely influenced by several key factors. First, the ongoing demand in the real estate market, driven by low housing inventory and fluctuating interest rates, has created a competitive environment that skilled agents can capitalize on. NextHome’s tech-driven approach, including its user-friendly CRM and marketing tools, provides franchisees with a competitive edge in attracting and managing clients effectively. Additionally, as the brand grows and builds a strong reputation, franchisees benefit from increased brand recognition, which can drive more referrals and repeat business. Economic factors, such as shifting consumer preferences for flexible living spaces and relocations, may also have contributed to steady or improved performance across many markets.
Nexthome Franchise Operational Costs
Operational costs for a franchise like Nexthome are the ongoing expenses required to run the day-to-day operations of the business. These costs are essential for maintaining the business’s functionality and ensuring smooth operations. For a Nexthome franchise, operational costs include:
- Office Lease and Utilities Monthly expenses for office space, electricity, internet, and other utilities, especially important if your brokerage operates from a physical location.
- Technology and Software Costs for CRM systems, website maintenance, and other digital tools essential for client management and marketing.
- Employee and Agent Wages Salaries or commissions for support staff, licensed agents, or other team members.
- Marketing and Advertising Ongoing costs for local advertising, online listings, social media promotion, and community engagement to attract clients and maintain a strong market presence.
- Insurance Business insurance to cover liabilities, as well as any necessary real estate-specific coverage.
- Professional Fees Costs for legal, accounting, and compliance services to ensure the brokerage meets industry regulations and maintains financial accuracy.
These costs are essential for maintaining operations and supporting client acquisition and retention in a NextHome franchise.
Nexthome Franchise Fees
When opening a NextHome franchise, there are several specific ongoing fees to consider. Here’s a breakdown of these costs:
- Base Franchise Fee $125 per month, payable by the 10th day of each month, in addition to other royalty fees.
- Non-Team Royalty Fee For each licensed associate not on a team, there’s a choice between 6% of adjusted gross income (Percentage Plan) or a flat monthly fee of $210 for a 1-year term or $200 for a 5-year term.
- Team Royalty Fee For each team, the fee includes $125 per month per team and $120 per licensed associate on that team for a 1-year term or $100 for a 5-year term.
There might be additional fees not listed here, so it’s advisable to review the Franchise Disclosure Document (FDD) carefully or speak with a NextHome representative for a comprehensive understanding of all fees.
Nexthome Franchise Earnings
NextHome does not disclose specific earnings or median gross sales data. However, as a real estate brokerage franchise, the potential earnings of a NextHome franchise largely depend on factors such as the franchisee’s location, the local real estate market conditions, and the number of licensed associates operating within the office.
For owner-operators, profitability can improve due to reduced staffing costs and a hands-on approach, which allows for more direct control over operations and client relationships. Franchisees may benefit from NextHome’s technology and marketing tools, which streamline operations and help attract clients, especially in competitive markets.
How to Open a Nexthome Franchise
The process to become a NextHome franchisee is structured to ensure a smooth transition from inquiry to operations. Here’s an outline of the steps involved:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Introductory Call After the inquiry, you’ll have an introductory call with a franchise representative to discuss your background, goals, and investment capabilities. This call is a great opportunity to ask preliminary questions and understand if the franchise aligns with your objectives.
- Discovery Day NextHome may invite you to a Discovery Day event, where you can visit the headquarters, meet the leadership team, and learn more about the brand’s culture and systems. Discovery Day provides an immersive look at daily operations and the support available.
- Application and Approval After Discovery Day, you’ll submit a formal application to become a franchisee. NextHome’s team will review your qualifications, financial background, and alignment with the brand. Upon approval, you’re ready to move forward with the final steps.
- Signing the Franchise Agreement Once approved, you’ll sign the Franchise Agreement, officially committing to the franchise. You’ll also pay the franchise fee at this stage, securing your rights to operate under the NextHome brand.
- Training Program NextHome provides a comprehensive training program covering real estate best practices, technology, marketing, and business operations. This training ensures you’re equipped with the skills and knowledge to run your brokerage successfully.
- Setting Up Operations With training complete, you’ll focus on setting up your office, recruiting agents, and acquiring necessary technology and tools. You’ll also start local marketing efforts to introduce your brokerage to the community.
- Grand Opening Once your office is ready, you’ll launch with a grand opening event to showcase your brokerage and attract potential clients. NextHome’s support team may assist with this initial phase to ensure a strong start.
Pros & Cons
Pros
Strong Brand Recognition: NextHome has over 600 locations across the U.S., giving it a well-established brand presence that can help new franchisees attract clients.
No Marketing Fee: Unlike many franchises, NextHome does not charge a separate marketing or brand fund fee, reducing ongoing costs for franchisees.
Tech-Driven Model: NextHome’s proprietary CRM and marketing tools give franchisees a competitive advantage by streamlining operations and enhancing client engagement.
Cons
No Financial Performance Data: NextHome does not provide Item 19 financials, so prospective franchisees lack specific data on potential earnings and profitability.
Dependent on Real Estate Market Conditions: As a real estate brokerage, revenue can be heavily influenced by local housing market fluctuations and economic conditions, which could lead to variability in earnings.
Hands-On Management: This franchise may require a more hands-on, owner-operator approach, which could limit its appeal for investors seeking a passive investment.
