Realogy Corporation, a global provider of real estate and relocation services, announced today that it has entered into a long-term agreement to license the Better Homes and Gardens® Real Estate brand from Meredith Corporation (NYSE: MDP), one of the nation's leading media and marketing companies. Realogy intends to build a new international residential real estate franchise company using the Better Homes and Gardens® Real Estate brand name.
"We are very pleased to add Better Homes and Gardens Real Estate to our family of real estate companies, and we are equally proud to be entrusted by Meredith with the stewardship of this well-known and respected brand that is so deeply tied to the concept of owning and improving one's home," said Richard A. Smith, Realogy's vice chairman and president. "Looking more broadly, this agreement demonstrates our confidence in the long-term strength of the housing market, particularly in the U.S., and the favorable demographic factors that will continue to drive homeownership and household growth during the years and decades to come."
The licensing agreement between Realogy and Meredith is for a 50-year term, with a renewal option for another 50 years. Financial terms of the transaction were not disclosed, and the transaction is not expected to have an immediate material impact on Realogy's financial results. Meredith will receive ongoing license fees based upon the royalties that Realogy earns from franchising the Better Homes and Gardens Real Estate brand. Meredith, owner of an 85-million name consumer database, will offer Realogy selected database services.
Realogy plans a July 1, 2008 launch of the Better Homes and Gardens Real Estate franchise system and will engage in various pre-launch activities in the interim.
"This is a tremendous opportunity to capitalize on the power of America's leading consumer magazine brand on behalf of the world's most successful real estate franchise company," said Meredith President and Chief Executive Officer Stephen M. Lacy. "It fits extremely well with our strategic objective to further diversify our business by providing Meredith with significant sources of revenue not dependent on traditional advertising."
"Better Homes and Gardens Real Estate is a highly strategic addition to Realogy's premier portfolio of real estate franchise holdings, a brand that comes with well-established equity and one that we expect will compete well in the marketplace," added Smith.
The Better Homes and Gardens name has been a staple in American life ever since 1924 when Meredith first published the magazine under that masthead. Today, the magazine boasts a circulation of 7.6 million and a readership of nearly 40 million. In 1978, Meredith launched the former Better Homes and Gardens Real Estate service, which it owned and operated for 20 years, and grew the business into a highly respected name in the real estate industry. Meredith sold its real estate business in 1998 while retaining ownership of the Better Homes and Gardens Real Estate brand name.
Better Homes and Gardens Real Estate will become Realogy's fifth residential real estate franchise brand and sixth overall. Today, Realogy owns the CENTURY 21®, Coldwell Banker® and ERA® residential real estate brands, along with a commercial real estate franchise system in Coldwell Banker Commercial®. Realogy also has a similar long-term licensing agreement with Sotheby's Holdings, Inc. to license the Sotheby's International Realty® name, a relationship that began in February 2004 and has grown to approximately 400 franchise and company-owned offices globally with more than 8,000 agents around the world.
"We have more than a decade of experience in managing world-class real estate brands that compete successfully in the local marketplace, and we also recognize that there is ample room for continued growth in the industry," said Alex Perriello, president and CEO of the Realogy Franchise Group. "We believe that there are substantial domestic and international growth opportunities in real estate franchising, and Better Homes and Gardens Real Estate will help us accelerate that growth."
The National Association of Realtors® (NAR) 2006 Profile of Real Estate Firms reported that 77% of residential real estate brokerages and 45% of real estate agents are unaffiliated with any franchise. Furthermore, the same NAR survey showed the value of franchising in that 88% of real estate firms reported that their franchise affiliation improved their name recognition; 83% reported a beneficial impact on their ability to acquire listings; and 72% reported that their franchise affiliation contributed to an increase in profits. - Source: Realogy Corp. Press