Opening a real estate franchise is an exciting opportunity—but for many aspiring franchisees, the legal aspects can feel like uncharted territory. Whether you’re an experienced agent becoming a broker or a savvy entrepreneur looking to invest in a proven business model, understanding the legal framework is critical for long-term success.
At 1 Percent Lists, we believe that clarity and confidence go hand-in-hand. This post breaks down the legal side of buying a real estate franchise so you can move forward with your investment knowing exactly what to expect. From franchise documents to licensing requirements, we’re covering everything you need to know before launching your own discount real estate brokerage under a nationally recognized branding.
What Makes Real Estate Franchising Unique?
Franchising in real estate brings together two complex industries—real estate and franchising—each with its own legal landscape. This combination creates a unique opportunity, but it also comes with specific responsibilities.
Unlike starting a brokerage from scratch, when you buy a real estate franchise, you’re entering into a legal partnership with an established brand. You’re not only responsible for your brokerage’s performance and compliance with local real estate laws, but also for upholding the franchisor’s standards and policies.
For example, 1 Percent Lists offers franchisees access to modern marketing tools, powerful technology, and national branding—but with that comes a commitment to maintain brand integrity and adhere to franchise-wide policies. Fortunately, these expectations are clearly outlined in legal documents you’ll receive during the onboarding process, which we’ll cover next.
Key Legal Documents You’ll Encounter
Before opening your doors as a franchisee, you’ll need to review and sign a few critical legal documents. These agreements are designed to protect both you and the franchisor while outlining the expectations for your partnership.
Franchise Disclosure Document (FDD)
The Franchise Disclosure Document is required by federal law and must be provided to you at least 14 days before signing a franchise agreement. Think of the FDD as a comprehensive guide to the franchise opportunity, complete with financials, legal history, and fee structures.
Pay close attention to:
- Item 7: Details the total cost of a real estate franchise, including the initial franchise fee, equipment, marketing costs, and other startup expenses.
- Item 19: Offers insight into potential earnings. While not all franchisors provide this, 1 Percent Lists includes performance data to help you evaluate your investment.
Franchise Agreement
Once you’ve reviewed the FDD and decided to move forward, you’ll sign the franchise agreement—a legally binding contract that defines your rights and obligations as a franchisee.
This agreement will cover:
- Territory rights and exclusivity
- Use of trademarks and branding
- Support and training provided by the franchisor
- Conditions for renewal or termination
Understanding this document is crucial before committing to buy a real estate franchise, especially if you’re transitioning from being an agent to becoming a broker for the first time. It’s always wise to review the agreement with a franchise attorney to make sure your interests are protected.
Real Estate Licensing & State Regulations
Franchise ownership in the real estate industry comes with an added layer of responsibility: compliance with state licensing laws. These vary widely depending on your location, but most states require a licensed broker of record to operate a real estate office—franchised or not.
If you’re an agent becoming a broker, you’ll need to meet your state’s education, testing, and experience requirements before taking on a leadership role. Some states also impose brokerage firm licensing requirements in addition to individual licensure.
At 1 Percent Lists, we help guide new franchisees through this process. Whether you’re stepping into brokerage ownership for the first time or expanding your existing business, our team can assist with navigating local regulations and ensuring your discount real estate brokerage is set up legally and compliantly from day one.
Business Structure and Entity Formation
Before signing your franchise agreement, you’ll need to establish a legal business entity. Choosing the right structure—such as an LLC or S Corporation—can affect everything from how you’re taxed to your personal liability as a franchise owner.
Forming a separate entity is especially important when you buy a real estate franchise because it separates your personal assets from your business operations. This legal layer of protection can be critical, particularly if you plan to hire agents or enter into lease agreements.
It’s a good idea to consult with an attorney or accountant to determine the best structure for your situation. Not only does this protect your investment, but it also helps create a strong legal foundation for your business as you grow your branding and market presence under the 1 Percent Lists name.
Compliance & Ongoing Legal Responsibilities
Once your franchise is up and running, your legal responsibilities don’t stop. You’ll need to remain compliant with both franchise regulations and real estate laws on an ongoing basis.
Key areas to stay on top of include:
- Advertising laws: Ensure that your marketing efforts are honest, transparent, and compliant with local and national advertising regulations—especially important when promoting a discount real estate broker model.
- RESPA and fair housing laws: These federal guidelines are critical in protecting consumers and maintaining ethical standards in real estate transactions.
- Broker supervision: In most states, the broker of record is legally responsible for all licensed activities within the firm, including agent conduct and transaction oversight.
At 1 Percent Lists, we offer compliance checklists, marketing templates, and regular updates to help franchisees stay ahead of legal changes. This ongoing support ensures that your investment remains protected and your operations continue to reflect the high standards associated with our national branding.
How 1 Percent Lists Supports You Legally
One of the most valuable aspects of partnering with 1 Percent Lists is the legal support baked into the franchise model. We understand that navigating contracts, state licensing, and regulatory compliance can feel overwhelming—especially for those new to franchise ownership.
That’s why we provide:
- Guidance through the Franchise Disclosure Document and franchise agreement review.
- Assistance with state-specific licensing questions, including resources for an agent becoming a broker.
- Proven advertising templates that are legally compliant and aligned with our national branding.
- Access to a network of trusted professionals who can assist with legal, tax, and entity formation questions.
By making legal compliance a part of our onboarding and operational processes, we help protect your investment so you can focus on growing your business and standing out as a discount real estate broker in your market.
When to Involve a Franchise Attorney
While 1 Percent Lists provides substantial support, it’s always a good idea to consult with a franchise attorney before you buy a real estate franchise. A qualified attorney can help you:
- Understand the long-term implications of your franchise agreement.
- Ensure your business structure aligns with your financial goals.
- Protect your personal assets in the event of legal disputes or operational challenges.
A franchise attorney who understands both real estate and franchise law can be a vital partner in your success, especially during the initial phases of launching your business.
Conclusion
Starting a real estate franchise is an exciting and potentially life-changing move—but it comes with legal responsibilities that should never be overlooked. From understanding your cost of a real estate franchise to managing state compliance as a broker, being legally prepared helps ensure a smooth and profitable transition into ownership.
The good news? With 1 Percent Lists, you’re not going it alone. We provide the tools, support, and branding to help you thrive as a discount real estate broker—all while making sure your legal foundation is rock solid.
Ready to explore the next steps? Contact us today to request more information or receive a copy of our Franchise Disclosure Document. It’s time to take control of your career, build something lasting, and turn your next move into a smart investment.