I have a KW moving into my area. When comparing costs/benefit we are competetive for lower and mid-level producers. The problem I am running into with high producers is the franchise fee cap. As a Cendant franchisee, I pay 8% royalties on every dollar in the door. I must charge at least the 8% service fee on my best contracts (top agents).

It is my understanding that KW caps franchise fees at $3000. If I have a high producing agent bringing 500k of commission dollar in, I would be paying $40,000 in royalties. I must charge even the top agents this 8%.

With a $37,000 difference in franchise fee, how do I compete?

A great contract + free advertisement + free copies + etc doesn't equal $37,000.

Any ideas? How are traditional brokers competing with KW on top agents?