Home Smart Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$65,500 - $205,000
Franchise Fee
$20,000
Total US Locations
262
Business Summary
HomeSmart International offers franchises for the operation of a Real Estate Brokerage Business, providing real estate brokerage services to both residential and commercial property purchasers and sellers.
Corporate History
HomeSmart International, LLC was formed as an Arizona limited liability company on May 19, 2005, and began offering franchises for HomeSmart Real Estate Brokerage Businesses in August 2005. The overall HomeSmart brand originates from HomeSmart, LLC, which was founded by Matt Widdows in Phoenix, Arizona, in June 1997. The parent company, HomeSmart Holdings, Inc., a Delaware corporation, was later formed on October 22, 2020, to consolidate various equity interests.
Financial Overview
Investment Range
$65,500 - $205,000
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$20,000
Equipment Costs (Low)
$10,000
Equipment Costs (High)
$70,000
Working Capital
$37,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
In 2023, HomeSmart Holdings, Inc., the parent company, reported a net loss of $2.9 million and had negative working capital of $13.8 million. The auditors noted that there was substantial doubt about HomeSmart Holdings, Inc.'s ability to continue operations for the next 12 months without further action. However, management stated its intention to refinance debt and the company's founder committed to providing necessary financial support. For the fiscal year ended December 31, 2024, HomeSmart Holdings, Inc. reported a net income of $4.676 million.
Financing Details
HomeSmart International does not offer any direct or indirect financing to franchisees, nor does it guarantee any notes, leases, or obligations for them. Franchisees are responsible for securing their own funding.
Performance Metrics
Total US Locations
262
Franchised Units
205
Corporate Units
57
Franchising Since
2005
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
6
Litigation Summary
HomeSmart International has been involved in several legal matters. In 2020, HomeSmart International entered into an agreement with the State of Washington to remove and not enforce 'no-poaching' clauses in its franchise agreements. In 2021, HomeSmart International was a defendant in a tortious interference lawsuit in Pennsylvania which was dismissed in 2023 following a confidential settlement payment. More recently, in December 2023, HomeSmart International was named as a defendant in a class-action lawsuit in Missouri alleging a conspiracy to inflate commissions for home sellers, which was dismissed in December 2024 after a settlement agreement, though some class members have appealed. Another class-action lawsuit was filed in Nevada in March 2024 with similar claims regarding inflated commissions for home sellers, which HomeSmart International plans to vigorously defend. In October 2024, HomeSmart International was named in a lawsuit in Arizona, claiming vicarious liability for a real estate agent's conduct, but HomeSmart International expects to be dismissed as it is not a brokerage and had no connection to the events. Finally, in July 2024, HomeSmart International was sued in a class-action lawsuit in Arizona under the Telephone Consumer Protection Act for making unsolicited calls after requests not to be contacted, which HomeSmart International denies and plans to move for summary judgment.
Bankruptcy History
HomeSmart International has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, HomeSmart International franchisees must meet several conditions. HomeSmart International franchisees must be in good standing, meaning they have not defaulted on any terms of their Franchise Agreement and are current with all payments owed to HomeSmart International and their trade creditors. They must also have met their Annual Agent Quota and opened the agreed-upon number of Branch Offices. Franchisees need to provide written notice of their intent to renew between six to nine months before the Initial Term expires. Upon renewal, they are required to sign HomeSmart International's then-current Franchise Agreement, which may have different terms, and pay a Successor Franchise Fee. Additionally, franchisees must sign a general release of claims against HomeSmart International, upgrade their computer system to current standards, comply with the Operations Manual, and provide proof of all required certificates, licenses, insurance, and permits.
Training & Support Program
Franchisor Assistance
HomeSmart International offers various forms of assistance and support to its franchisees. Before a HomeSmart International franchised business opens, HomeSmart International designates the franchisee's territory, provides specifications for the office design and required supplies, and conducts an initial training program lasting three to five business days for the franchisee or their designated business manager in Scottsdale, Arizona, or another specified location. HomeSmart International also approves office renovations to ensure compliance with its standards. After the business opens, HomeSmart International provides ongoing telephone support during business hours for operational issues, although technological support may be referred to third parties who might charge a fee. HomeSmart International informs franchisees of mandatory operating standards and researches new services and methods, maintains a Franchise Marketing Accrual Fund (FMAF) for promotional and advertising programs, and supplies advertising materials like an arts graphics package. Additional on-site assistance is available upon request, subject to agreed-upon charges for time and travel. HomeSmart International may also host mandatory national, regional, or local workshops and seminars, for which franchisees must attend and pay conference fees and all travel expenses. A monthly newsletter is also provided to franchisees.
Initial Training Hours
40
Training Location
Scottsdale, Arizona, or the franchisee's Central Office (at franchisor's discretion)
Ongoing Support
After a HomeSmart International franchised business opens, HomeSmart International provides ongoing telephone support from a representative during regular business hours to discuss operational issues and support needs, though technical support may be outsourced and chargeable. HomeSmart International informs franchisees of mandatory operating standards and researches new services. It manages the Franchise Marketing Accrual Fund (FMAF) for promotional and advertising programs and provides advertising materials such as an arts graphics package. While additional on-site assistance may be available from HomeSmart International representatives, this typically incurs extra charges for the franchisee. HomeSmart International may also offer continuing national, regional, or local workshops and seminars, which franchisees are required to attend and pay for, along with their travel and living expenses. A monthly newsletter is also provided to franchisees.
Franchise Requirements
Ideal Candidate Profile
HomeSmart International seeks franchisees who are licensed real estate brokers in the state where they intend to operate and are familiar with local real estate laws and regulations. Ideal candidates or their owners should have previous experience in real property transactions. If the franchisee is a business entity or lacks sufficient business management experience, they must appoint a Designated Business Manager with the required experience to directly supervise the office operations. Franchisees and their agents are required to join local, state, and national real estate associations. Additionally, franchisees need to possess sufficient computer skills to operate their systems, use required software, and navigate email and the internet.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
Yes
Technical Skills Required
Yes
Operational Details
Location Type
Commercial
Owner Participation
Hands-On
Territory Type
Non-Exclusive
Territory Size Requirements
HomeSmart International defines territories through negotiation, considering geographic or political boundaries like city, zip code, county, or state lines, as well as natural boundaries and the amount and size of urban, suburban, and rural areas. HomeSmart International also uses data from the National Association of Realtors to determine the number of licensed agents within a proposed territory. The Annual Agent Quota, which ranges from 25 to 125 agents per year, is negotiated based on territory size, population, activity, and local and national economic conditions. Franchisees must also open a mutually agreed-upon number of Branch Offices within their territory.
Staffing Notes
HomeSmart International requires that each franchised Central Office and any Branch Office be directly supervised by either the individual franchisee or a Designated Business Manager. Franchisees are solely responsible for all aspects of their employees' employment, including setting wages, benefits, schedules, work duties, and handling hiring, firing, and discipline, as well as maintaining safety standards. Franchisees must ensure that all employees, agents, and other personnel providing real estate services are properly licensed and uphold high ethical standards. The Operations Manual outlines guidelines for employee appearance and condition of the business. Franchisees must also ensure that they have sufficient employees and agents on hand to efficiently meet anticipated business volume. All agreements with agents, including their fee structure, must be approved by HomeSmart International.