HomeSmart 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 businesses that provide real estate brokerage services to individuals buying and selling residential and commercial properties. HomeSmart Real Estate Brokerage Businesses operate using a specific system, including trademarks, operational procedures, training, and marketing programs. Each business assists customers with real estate transactions and uses proprietary technology to manage agents and operations.
Corporate History
HomeSmart International, LLC was established as an Arizona limited liability company on May 19, 2005, and began offering franchises for HomeSmart Real Estate Brokerage Businesses in August 2005. Its parent company, HomeSmart Holdings, Inc., was formed later on October 22, 2020. The founder, Matt Widdows, also established HomeSmart, LLC in 1997, which operates company-owned HomeSmart brokerages. HomeSmart International has several affiliates that provide various services, such as professional employer organization (PEO) services, title agency services, mortgage brokerage, printing, and technology solutions.
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
HomeSmart Holdings, Inc. reported a net income of $4.676 million in 2024, a notable improvement from a net loss of $2.920 million in 2023. While total revenue slightly decreased from $470.365 million in 2023 to $458.966 million in 2024, operating expenses also saw a significant reduction. Cash and cash equivalents increased to $4.949 million in 2024 from $1.274 million in 2023. Although the company had negative working capital in both 2023 and 2024, it improved from -$13.824 million in 2023 to -$7.021 million in 2024. The auditors for 2023 had raised concerns about the company's ability to continue as a going concern due to losses and negative working capital, but management outlined plans to refinance debt and committed to providing financial support. The most recent auditor's report for 2024 did not include a going concern qualification, indicating an improved financial outlook.
Financing Details
HomeSmart International does not offer any direct or indirect financing options to its franchisees. Additionally, HomeSmart International does not guarantee any notes, leases, or other financial obligations incurred by its franchisees.
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 six disclosed litigation cases. In 2020, HomeSmart International entered an agreement with the State of Washington to remove 'no-poaching' clauses from its franchise agreements and not enforce them, with existing agreements to be amended upon renewal. In January 2021, HomeSmart International was a defendant in a Pennsylvania lawsuit for tortious interference, which was dismissed in July 2023 following a confidential settlement payment. In December 2023, HomeSmart International was named in a class-action lawsuit in Missouri, alleging a conspiracy to inflate real estate commissions; this case was dismissed in December 2024 after a settlement, which some class members have appealed. In March 2024, HomeSmart International became a defendant in a similar class-action lawsuit in Nevada regarding alleged anticompetitive rules and inflated commissions, which HomeSmart International plans to vigorously defend. In October 2024, HomeSmart International was sued in Arizona, with the plaintiff claiming vicarious liability for a real estate agent's conduct; HomeSmart International expects to be voluntarily dismissed from this case. Lastly, in July 2024, HomeSmart International was named in a class-action lawsuit in Arizona, alleging violations of the Telephone Consumer Protection Act for unsolicited calls; HomeSmart International denies wrongdoing and intends to seek summary judgment.
Bankruptcy History
HomeSmart International, LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, HomeSmart International franchisees must meet several conditions: they must not be in default of any terms of the Franchise Agreement, provide written notice of their intent to renew between six and nine months before the initial term expires, and be current on all payments owed to HomeSmart International and their trade creditors. Franchisees are also required to sign a general release of all claims against HomeSmart International, pay a Successor Franchise Fee, sign a new Franchise Agreement (which may have materially different terms), upgrade their computer system to meet current standards, comply with all provisions in the Operations Manual, and provide proof of current certificates, authorizations, licenses, and insurance.
Training & Support Program
Franchisor Assistance
Before a HomeSmart International franchisee opens their business, HomeSmart International assists by designating their territory, providing specifications for office design and supplies, and conducting an initial training program lasting three to five business days in Scottsdale, Arizona, or another designated location. HomeSmart International also approves office renovations to ensure compliance with its standards and loans the franchisee a confidential Operations Manual. After opening, HomeSmart International offers ongoing support through telephone discussions with a representative about operational issues (though technological support is handled by third parties, potentially for a fee). HomeSmart International informs franchisees of mandatory operating procedures, researches new services, maintains a Franchise Marketing Accrual Fund for advertising and public relations, and provides advertising materials. HomeSmart International may also offer additional on-site assistance for a fee and holds mandatory annual conferences that franchisees must attend, covering sales, service developments, and operational topics. Franchisees are also required to upgrade their computer systems and utilize HomeSmart International's proprietary technology, including data integration services for MLS, for which a monthly fee is charged.
Initial Training Hours
40
Training Location
Scottsdale, Arizona
Ongoing Support
After opening, HomeSmart International franchisees receive ongoing support including telephone assistance from a representative for operational issues during business hours, though technical support is referred to third-party providers who may charge a fee. HomeSmart International regularly informs franchisees of mandatory operational standards and procedures, researches new services and business methods, and shares information about these developments. HomeSmart International manages a Franchise Marketing Accrual Fund to develop promotional, advertising, and public relations programs for all HomeSmart Real Estate Brokerage Businesses, and provides advertising materials in the form of an arts graphics package. Optional additional on-site assistance can be requested, which may incur charges based on the length and nature of the visit. HomeSmart International also conducts mandatory annual conferences and may offer national, regional, or local workshops and seminars that franchisees are required to attend, with franchisees responsible for conference fees and travel expenses. Additionally, HomeSmart International may provide a monthly newsletter to franchisees.
Franchise Requirements
Ideal Candidate Profile
HomeSmart International seeks franchisees who are or whose owners are licensed real estate brokers, familiar with local and state real estate laws and regulations, and possess previous experience in real property transactions. The ideal candidate will use the HomeSmart International system and marks to operate a real estate brokerage business, not for speculative or investment purposes. The franchisee, if an individual, must directly supervise the primary franchised location (Central Office). If a business entity, direct on-site supervision of the Central Office, and any Branch Offices, must be performed by a Designated Business Manager. If HomeSmart International determines that the owner lacks sufficient business experience, a Designated Business Manager with the required experience must be nominated and must successfully complete the initial training program.
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
Staff Count
75
Territory Size Requirements
HomeSmart International negotiates the size of each franchisee's territory and the number of required branch offices before the Franchise Agreement is signed. The territory may be defined by geographic or political boundaries, such as city, zip code, county, or state lines, and also considers natural boundaries, as well as the amount and size of urban, suburban, and rural areas. The number of branch offices a franchisee commits to opening is mutually agreed upon based on subjective factors like geography, population, demographics, and the level of residential real estate transaction activity in the territory. HomeSmart International retains the exclusive right to determine the exact boundaries of the territory.
Staffing Notes
HomeSmart International franchisees must ensure their businesses are adequately staffed with employees and agents to efficiently handle anticipated business volume. The owner or a Designated Business Manager is required to directly supervise the Central Office and any Branch Offices. If the owner is deemed to lack sufficient business experience, a Designated Business Manager with the necessary experience must be appointed and successfully complete the initial training program. Franchisees must meet an Annual Agent Quota, ranging from approximately 25 to 125 agents per year in 2023, to maintain their territory. Franchisees are responsible for supervising their agents and employees, ensuring adherence to high ethical standards, and entering into written agreements with agents that include a franchisor-approved fee structure. Franchisees must also provide their agents with appropriate supervision, similar to what a reasonable real estate broker would offer.