Sotheby’s International Realty Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$46,150 - $512,150
Min Cash Required
$75,000
Total US Locations
710
Business Summary
Sotheby's International Realty Affiliates LLC offers franchises for real estate brokerage offices specializing in residential real estate, and potentially authorized commercial and approved auction services. Sotheby's International Realty franchisees operate these offices under the Sotheby's International Realty brand using a proprietary system that includes access to brand-specific tools, productivity resources, business development support, education, and marketing and advertising services. The franchise primarily seeks to convert existing real estate brokerage businesses that meet specific market and operational criteria, though it also considers newly formed brokerages composed of qualifying agents.
Corporate History
Sotheby's International Realty Affiliates LLC was established as a Delaware limited liability company on February 6, 2004. Shortly after, in February 2004, an affiliated entity secured the exclusive licensing rights for the Sotheby's International Realty name and trademarks for an initial 50-year period, with an option for another 50 years. Sotheby's International Realty Affiliates LLC then obtained an exclusive sublicense to offer real estate brokerage franchises, which it began doing in May 2004. Prior to this, some real estate businesses had operated under the Sotheby's International Realty name through a different affiliate license model. Sotheby's International Realty Affiliates LLC operates under the umbrella of its parent company, Anywhere Real Estate Inc., which went public in 2012. Anywhere Real Estate Inc. also owns other real estate franchise brands and a company-owned brokerage operation that may operate in competition with Sotheby's International Realty franchisees.
Financial Overview
Investment Range
$46,150 - $512,150
Franchise Fee (High)
$25,000
Minimum Cash Required
$75,000
Minimum Net Worth
$150,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$37,700
Equipment Costs (High)
$222,500
Working Capital
$75,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Sotheby's International Realty Affiliates LLC's parent companies, Anywhere Real Estate Inc. and Anywhere Real Estate Group LLC, show a history of net losses: $(127) million in 2024, $(98) million in 2023, and $(283) million in 2022. The companies also recognized significant goodwill and trademark impairments in prior years, including $394 million for goodwill and $76 million for franchise trademarks in 2022, and $25 million for both goodwill and trademarks in 2023. As of December 31, 2024, the consolidated balance sheet indicates a negative working capital position, with current assets of $581 million against current liabilities of $1,389 million, suggesting challenges in covering short-term obligations. Total short-term and long-term debt amounted to $2,521 million. The company recently agreed to an $83.5 million nationwide settlement for antitrust litigation, with $53.5 million still due after appeals are exhausted (expected mid-2025), and faces an ongoing $40 million legacy tax matter, both of which are anticipated to become payable in early 2025. While the auditors issued an unqualified opinion, these financial results highlight ongoing operational and financial challenges.
Financing Details
Sotheby's International Realty Affiliates LLC is not obligated to provide financing, but it may offer two types of financing to eligible franchisees to help with conversion costs or growth opportunities. The first is a Conversion Promissory Note, which helps with conversion or opening costs for new or additional offices. This note has a 9-year maturity and allows for annual principal forgiveness if the franchisee meets specific Gross Revenue thresholds and maintains compliance with the franchise agreement. If these conditions are not met, the annual principal payment becomes due. The second is an Expansion Promissory Note, offered to existing franchisees for acquisitions or other business-related expenses. This note is interest-bearing and must be repaid in full six months before the franchise agreement expires, with no forgiveness option. Both types of notes require personal guaranties from all owners and their spouses, a security agreement, and a pledge of future rebates. If a franchisee defaults on either note or the franchise agreement, the entire outstanding principal and accrued interest become immediately due, incurring an 18% annual interest rate. Before granting financing, Sotheby's International Realty Affiliates LLC may require a six-month operational review of the franchise.
Performance Metrics
Total US Locations
710
Franchised Units
666
Corporate Units
44
Avg Square Footage
2,650
Franchising Since
2004
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
10
Litigation Summary
Sotheby's International Realty Affiliates LLC and its parent company, Anywhere Real Estate Inc., have been involved in a number of significant legal actions. The company recently settled several class-action antitrust lawsuits (Moehrl, Burnett, and Nosalek cases) across the United States for $83.5 million, which aims to release the company and its franchisees from claims related to buyer-broker commissions and alleged anti-competitive policies. This settlement received final court approval in May 2024 but is currently under appeal. Following these settlements, dozens of similar "copycat" lawsuits have been filed, many of which name Anywhere Real Estate Inc. or its franchisees, but these are generally stayed pending the outcome of the settlement appeals. Sotheby's International Realty Affiliates LLC is also a defendant in an ongoing nationwide class action (Batton) filed in January 2021 on behalf of home buyers, alleging harm due to inflated commissions and home prices caused by NAR policies, which the company is vigorously defending. Another ongoing class action (Chinitz), filed in June 2019, involved allegations of Telephone Consumer Protection Act violations by affiliated agents of Anywhere Advisors LLC (a subsidiary); this case entered a preliminary settlement for $20 million in March 2025. Additionally, the company is facing a new antitrust lawsuit (Homie Technology) filed in August 2024 in Utah, which alleges conspiracy to exclude new market entrants and is awaiting a court ruling on a motion to dismiss. Earlier resolved litigation included a Washington lawsuit against Sotheby's International Realty Affiliates LLC for franchise law violations, settled for $175,000 in 2018, and a RESPA class action against Anywhere Real Estate Inc. and its subsidiaries, settled for $8.5 million in 2017. There is also an ongoing regulatory investigation by the Washington Attorney General's office into alleged anti-competitive practices, which Anywhere Real Estate Inc. is cooperating with.
Bankruptcy History
Sotheby's International Realty Affiliates LLC has no bankruptcy history to disclose, and no bankruptcy proceedings are required to be reported in this section of the document.
Agreement Terms
Initial Term
10 years
Renewal Term
1 years
Renewal Conditions
Sotheby's International Realty Affiliates LLC does not grant franchisees explicit renewal rights for the primary franchise agreement. However, if Sotheby's International Realty Affiliates LLC chooses to grant an additional term, franchisees may be required to sign the then-current franchise agreement or a Term Extension Addendum, which could have materially different terms. Additionally, if a franchisee is approved to open an additional Branch Office, Sotheby's International Realty Affiliates LLC has the right to extend the existing Franchise Agreement for 10 years. For certain Limited Purpose Offices, such as Gallery Offices and other Limited Purpose Offices, the term automatically extends for additional one-year periods until terminated.
Training & Support Program
Franchisor Assistance
Sotheby's International Realty Affiliates LLC provides comprehensive support to its franchisees, starting with initial training and continuing throughout the franchise term. Before opening, the franchisor inspects proposed office locations to ensure they meet design standards. Sotheby's International Realty Affiliates LLC provides access to a Policies and Procedures Manual, which includes mandatory operational and identity standards that franchisees must follow. Initial training is a mandatory two-day "Orientation" program for the Responsible Broker or a designee, covering brand protection, online presence, tools, marketing, and development. For new franchisees, Sotheby's International Realty Affiliates LLC covers certain travel and lodging costs for one attendee from the first office. On an ongoing basis, Sotheby's International Realty Affiliates LLC offers recommendations for system improvements, provides optional educational courses and seminars (for which franchisees pay fees and expenses), and manages a Brand Marketing Fund. This fund, supported by monthly contributions (2% of gross revenue, with minimums and maximums) from franchisees and company-owned outlets, finances national and regional advertising, marketing, and public relations campaigns to build brand recognition. Franchisees are also responsible for local marketing efforts. In terms of technology, Sotheby's International Realty Affiliates LLC provides a free internet-based reporting system for transaction data and offers a complimentary Productivity Suite (CRM, presentation tool, websites) and Leads Engine, although it reserves the right to charge for these in the future. It also maintains a public consumer website (sothebysrealty.com) and a private intranet site for franchisees. Sotheby's International Realty Affiliates LLC may also offer optional ancillary services such as mortgage origination or title services for a fee.
Initial Training Hours
15
Training Location
Virtual or near corporate office in Madison, New Jersey
Ongoing Support
Sotheby's International Realty Affiliates LLC provides ongoing support through various channels after a franchisee's office is open. This includes recommendations for system improvements and changes delivered via bulletins, written materials, electronic communication, telephone consultations, or in-person visits to the franchisee's office. The franchisor also offers optional ongoing education courses, seminars, or conferences, which can be held online, at the corporate office, or in various regions; franchisees are responsible for course fees and travel expenses for these voluntary events. An online learning platform is available with programs which are encouraged for franchisees and their independent sales associates. Additionally, the Responsible Broker, owner, or a designee is encouraged to attend an international business conference or at least one national or regional event designated by Sotheby's International Realty Affiliates LLC each calendar year.
Franchise Requirements
Ideal Candidate Profile
Sotheby's International Realty Affiliates LLC seeks franchisees who are either owners of existing real estate brokerage businesses in "Eligible Markets" that meet specific sales performance guidelines (top 40% in average selling price or transaction value, or top 3 in ASP or transaction value), or owners of newly formed residential brokerage businesses composed of agents who previously met these guidelines. Candidates must also meet Sotheby's International Realty Affiliates LLC's financial, professional, and operational standards, including maintaining a net worth in tangible assets exceeding $150,000 and liquid assets of at least $75,000, and adhering to office appearance requirements. Franchisees and their owners are required to actively participate in the management of the franchise, exercising continuous best efforts to develop the business. A "Responsible Broker" must be retained who is licensed and in good standing, and along with the office manager, must comply with all applicable laws and regulations.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
Yes
Technical Skills Required
Yes
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
Sotheby's International Realty Affiliates LLC does not grant franchisees a minimum area of protection or defined territory size in terms of geographic boundaries or population counts. Instead, the franchise determines an "Eligible Market" based on geographic areas where the median sales price for homes sold is at least 1.5 times the national median sales price during the preceding 12 months. Franchisees will operate within a "Geographic Market" where their office is located and principally operates, but this does not convey proprietary territorial rights.
Staffing Notes
Sotheby's International Realty Affiliates LLC franchisees are required to retain a "Responsible Broker" who is a licensed real estate broker in good standing in the state where the office is located. The Responsible Broker, along with the franchisee's owners and any office managers, must actively participate in managing the franchise, dedicating continuous best efforts to its development and promotion, and comply with all applicable laws and regulations. The Responsible Broker or an agreed-upon individual must complete a mandatory Orientation training program. All management personnel, including the Responsible Broker and manager, are required to treat the franchise system's confidential information as proprietary. A typical office is expected to accommodate up to 30 people, which includes both employees and independent sales associates.