How to Finance a Better Homes and Gardens Real Estate Franchise
By Marc Cornella
A Better Homes and Gardens Real Estate franchise loan rarely looks like the restaurant or hotel financing most people picture when they hear the word franchise. A brokerage has little equipment and often no real estate of its own; its value lives in licensed agents, closed transactions, the share of each commission the firm keeps and a brand that consumers already know from the magazine name on the sign.
This article explains how the brand works, what is known about its fee structure, how most owners join (usually by converting an existing brokerage), what the brand’s SBA Franchise Directory listing means for buyers, and how lenders underwrite a brokerage acquisition, start-up or expansion under the brand.
US Professional Funding is not affiliated with, sponsored by or endorsed by Better Homes and Gardens Real Estate; the name is used only to describe the business. Figures from the franchisor’s disclosure document and public reports can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice, and buyers should review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Better Homes and Gardens Real Estate Franchise Loan at a Glance
- Franchisor: Better Homes and Gardens Real Estate LLC, which launched the brand in 2008.
- Brand name: licensed from the owner of the Better Homes & Gardens trademark under a long-term license agreement.
- Network size: 400 offices and 11,200 brokers and sales agents worldwide as of December 31, 2024, operating in 6 countries and territories, according to the parent company’s annual report.
- Royalty model: the parent company describes a capped model for this brand, generally 5% of commission income, capped per independent sales agent each year, with the cap adjustable annually.
- Marketing: franchisees make monthly contributions to a brand marketing fund.
- Franchise term: new domestic franchise agreements generally run ten years.
- Initial fee and investment: confirm the current initial franchise fee and estimated initial investment in Items 5 and 7 of the latest FDD.
- SBA Franchise Directory: listed under code S3096, with no special conditions noted.
What Is Better Homes and Gardens Real Estate?
Better Homes and Gardens Real Estate is a residential real estate brokerage brand that grants franchises to independently owned brokerages. The franchisor, Better Homes and Gardens Real Estate LLC, was founded in 2008, built on a long-term license of one of the best-known lifestyle names in American homes. The parent company’s annual report states that the license agreement was signed in October 2007 for a 50-year term, with an option to renew for another 50 years.
Positioning. The brand describes itself as offering a full range of services to brokers, sales associates and home buyers and sellers. Its pitch to brokerage owners centers on a consumer-recognized name, agent training, lead generation and client-acquisition tools, and technology support, while the owner keeps local leadership of the firm.
Network. As of December 31, 2024, the parent company reported 400 offices and 11,200 brokers and sales agents for the brand worldwide, and operations in 6 countries and territories. The brand’s own announcements show steady growth through affiliations of established local firms rather than start-up offices.
Why lenders view it the way they do. Lenders see an established national brand with a predictable royalty structure, a ten-year agreement and an SBA directory listing. But a brokerage’s cash flow depends on agents who can leave, on housing market cycles and on the firm’s share of each commission. Underwriting focuses on the individual brokerage’s history and the owner’s leadership far more than on the brand.
Better Homes and Gardens Real Estate Franchise Costs
Initial franchise fee. The parent company’s annual report states that its franchise agreements require an initial franchise fee for the franchisee’s principal office. The amount, and whether different terms apply to additional offices or to conversions, appear in Item 5 of the current FDD. Confirm the figure and any credits or incentives in writing before building your budget.
Office space. Brokerages typically lease office space rather than own it. Build-out costs depend on whether the firm needs a storefront presence, conference rooms for closings and training, or a smaller hub supported by remote agents.
Rebranding and signage. A converting brokerage replaces exterior and interior signs, yard signs, listing materials, business cards, vehicle graphics and digital assets with the new brand. These are one-time costs, but they can be meaningful for a multi-office firm.
Technology and onboarding. Expect costs for systems, transaction management, websites and agent onboarding, along with training for the broker of record and staff.
Working capital. Brokerage revenue arrives at closing, which can lag a signed contract by weeks or months. A new or converting firm needs funds to cover rent, staff payroll, marketing and franchise fees during the transition, especially if agents take time to move their pipelines.
Total investment. Item 7 of the current FDD gives the estimated initial investment for opening or converting an office. When reading it, expect line items such as:
- Initial franchise fee for the principal office
- Office lease deposits and leasehold improvements
- Furniture, computers and office equipment
- Signage, yard signs and rebranding materials
- Technology, website and system setup
- Licenses, insurance including errors and omissions coverage, and professional fees
- Training and travel
- Additional funds for the initial operating period
Use the current table and its assumptions to build sources and uses. If you are buying an existing brokerage, the purchase price will be the largest item, and Item 7 covers only the franchise-related costs.
Ongoing Fees and How They Affect Your Loan
Royalty. According to the parent company’s annual report, franchisees under this brand’s capped model generally pay royalties equal to 5% of commission income, capped per independent sales agent each year, and the cap may be adjusted annually. In practice, that means the royalty grows with production until an agent reaches the cap, after which additional commission from that agent carries no further royalty for the year.
Marketing fund. Franchisees make monthly contributions to the brand’s marketing fund. Item 6 of the current FDD lists the amount and how it is calculated.
Other fees. Technology, transfer, renewal and other fees appear in Item 6. Review them alongside the franchise agreement before projecting cash flow.
How lenders factor these costs in. Lenders start with gross commission income, subtract agent commissions to arrive at the firm’s company dollar, then deduct royalties, marketing contributions, rent, staff and other expenses before calculating cash available for debt service. Our article on company dollar, agent splits and gross versus net revenue explains why lenders focus on the share the brokerage keeps.
Conversion Incentives and Forgivable Notes
One feature that matters for financing is note-backed funding. The parent company’s annual report describes conversion notes and other note-backed funding that may be provided to franchisees, generally to encourage conversions or renewals. According to the report, these notes are funded only after credit checks and once the business is operating, and are forgiven ratably, generally over the term of the franchise agreement, if revenue thresholds are met. If thresholds are not met, or if the agreement terminates, the franchisee may have to repay part of the outstanding balance.
Why lenders care. A forgivable note is still debt until it is forgiven. Lenders will want to see the note, its forgiveness schedule, the revenue thresholds and the repayment triggers. A senior lender may require the note to be subordinated, and it will factor any repayment risk into its analysis. Never treat conversion funding as free equity when sizing an acquisition loan.
Franchisor Requirements for New Owners
The brand does not publish a single minimum net worth or liquidity figure in the materials reviewed for this article. Requirements generally reflect the nature of a brokerage franchise:
- Licensing: the firm must be operated under a properly licensed broker in each state where it does business, as state law requires.
- Existing production or a credible plan: converting firms bring agents and transaction history; new offices need a recruiting plan.
- Leadership: the owner or managing broker must be able to recruit, train and retain agents and manage compliance.
- Financial capacity: the ability to fund rebranding, technology and working capital through the transition.
- Commitment to the agreement: acceptance of a ten-year term and the franchise agreement’s transfer and termination provisions.
The approval process. Expect discovery meetings with the franchise development team, receipt of the FDD, review of the firm’s production and agents, negotiation of any conversion incentives and execution of the franchise agreement. Coordinate that timeline with your lender, especially on an acquisition where the seller’s agreement must be transferred or a new one signed.
Ways to Own a Better Homes and Gardens Real Estate Franchise
Converting an independent brokerage. This is the most common route reflected in the brand’s announcements. An established firm signs a franchise agreement, rebrands its offices and keeps its agents and listings. Financing is usually modest and focused on rebranding, technology and working capital. See our real estate brokerage expansion financing page.
Buying an existing franchised brokerage. A buyer acquires a firm already operating under the brand. The deal requires franchisor approval and an assignment or new agreement, and the buyer pays mostly for goodwill: agents, pipeline, listings and the firm’s name in the market. Our article on franchise affiliation transfers in a brokerage sale covers the approval steps.
Opening a new office. A licensed broker with a recruiting plan opens a new office under the brand. With no operating history, lenders lean on the owner’s personal production, experience and equity. Read about real estate brokerage start-up financing.
Adding offices or acquiring another firm. Existing franchisees grow by opening branch offices or buying neighboring brokerages and bringing them under the brand.
Financing Options for a Better Homes and Gardens Real Estate Franchise
SBA 7(a) loans. Because the brand is on the SBA Franchise Directory, an SBA 7(a) loan is often the main option for buying an existing brokerage, since it can finance goodwill along with working capital and transition costs. The buyer must still meet the SBA’s eligibility and equity requirements and the lender’s credit standards.
SBA 504 loans. The 504 program is designed for owner-occupied real estate and long-lived equipment. Most brokerages lease their offices, so 504 is relevant mainly when an owner buys the building the firm occupies.
Conventional term loans. Established multi-office firms with strong cash flow may use conventional business loans for acquisitions, office expansion or refinancing, typically with shorter terms and more emphasis on collateral and historical cash flow.
Equipment and technology financing. Brokerages are light on equipment, but computers, phone systems, office furniture, signage and conference room technology can be financed or leased, which helps preserve cash during a conversion.
Working capital and lines of credit. Closings cluster in certain seasons and depend on mortgage and appraisal timelines, so cash flow can be uneven even in a strong year. A line of credit can cover rent, payroll and marketing between closings or during agent recruiting pushes. See our brokerage working capital options.
Seller financing on acquisitions. Because a brokerage’s value depends on agents staying after a sale, sellers sometimes carry part of the price or agree to an earnout or transition period. Any seller note must be acceptable to the senior lender and is typically subordinate to it, and SBA rules may limit how it is structured or repaid.
SBA Loans for Better Homes and Gardens Real Estate Franchisees
SBA franchise lending runs through the SBA Franchise Directory, which lists brands whose agreements have been reviewed for SBA eligibility. A listing does not approve any borrower; it clears the franchise relationship so that lenders can consider an SBA-guaranteed loan.
The brand’s listing. Better Homes and Gardens Real Estate appears on the SBA Franchise Directory under code S3096, and the listing carries no special notes or conditions. In plain terms, the franchise relationship itself does not stand in the way of an SBA 7(a) or 504 loan; eligibility depends on the borrower and the deal.
How SBA lending fits a brokerage. SBA 7(a) loans can finance the purchase of an existing firm, including goodwill, along with working capital. Because brokerages have few hard assets, lenders focus on historical cash flow, the buyer’s licensing and experience, and personal guarantees, and may look to personal real estate as additional collateral where available. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Our article on SBA loans for real estate brokerages goes deeper.
Application tips. Bring the current FDD, the franchise agreement or transfer approval, several years of tax returns and profit and loss statements, a roster of agents with production history, the lease and a plan for keeping agents through the transition. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Better Homes and Gardens Real Estate Deal
Personal credit and financial history. Lenders review credit, personal and business tax returns and a personal financial statement for each significant owner, and typically require personal guarantees.
Net worth and liquidity. Buyers need equity for the down payment and reserves for the transition. Lenders want to see that the owner can cover a slow quarter of closings without missing payments.
Licensing and industry experience. The buyer or a key manager usually needs to be, or be able to become, the licensed broker of record. Experience running an office, recruiting agents and managing compliance strengthens a request. See our article on real estate brokerage loan requirements for the documents lenders ask for.
Business plan and projections. A Better Homes and Gardens Real Estate franchise loan request should show gross commission income, agent splits and company dollar, the 5% capped royalty, marketing contributions, rent and staffing, and a plan for agent retention and recruiting. Include assumptions about transaction volume and average price in the firm’s markets.
The FDD and franchise agreement. Lenders review the ten-year term, renewal and transfer provisions, limits on early termination and any conversion notes and their repayment triggers.
Agent concentration. If a few agents or teams generate most of the firm’s revenue, lenders will ask how the deal keeps them. Retention agreements, transition plans and the seller’s involvement after closing can all matter.
Historical financials for existing brokerages. Expect to provide several years of profit and loss statements, commission reports, tax returns and trust account records. Our article on brokerage valuation explains what lenders weigh when they review the purchase price.
Agents, Splits and the Value of a Brokerage
Unlike a restaurant or hotel, a brokerage has almost no collateral. Its value comes from people and relationships. That shapes every part of a franchise loan.
Company dollar. Lenders care about what the firm keeps after paying agents, not gross commission income. Two brokerages with similar gross revenue can produce very different company dollar depending on splits, caps and fee structures for agents.
Retention risk. Agents are typically independent contractors who can move to another firm. A sale or conversion is a moment of risk, so buyers should plan communication, incentives and support to keep productive agents.
Ancillary revenue. Some brokerages earn property management fees, referral income or other service revenue. Lenders give credit for steady, documented recurring income.
Market cycles. Housing activity rises and falls with rates, inventory and local economies. Lenders stress-test projections for slower transaction volume and expect reserves accordingly.
Multi-Office Growth
Brokerage owners grow by opening branch offices, recruiting teams or acquiring neighboring firms and bringing them under the brand. Each move brings a different financing need.
Opening a branch. A new office needs a lease, build-out, signage and working capital until recruited agents produce closings. Lenders often finance these through expansion or working capital loans backed by the existing office’s cash flow.
Acquiring another brokerage. Buying a nearby firm and converting it adds agents and listings quickly. Financing usually follows the acquisition model, with SBA 7(a) or conventional loans, and lenders review the combined company’s cash flow and the plan to integrate agents. See our brokerage acquisition financing page.
Managing the organization. As the firm grows, lenders expect consolidated financials, clear management for each office and a broker of record structure that meets state requirements.
Real-World Scenarios
Converting a family-owned independent firm. A second-generation broker affiliates the family’s independent brokerage with the brand to gain recognition and recruiting tools. The firm uses a modest working capital line and equipment financing for rebranding and technology, and its lender reviews any conversion note before closing.
A top agent buying the brokerage she works for. A licensed producer buys a franchised office from its retiring owner. An SBA 7(a) loan finances the goodwill and working capital, the seller carries a subordinated note and stays on during a transition period, and the franchisor approves the transfer.
Adding a second office. An established franchisee opens a branch in a nearby town. The lender bases the expansion loan on the first office’s cash flow and the owner’s recruiting plan.
Acquiring a competitor. A franchisee buys a neighboring independent firm and converts it to the brand. The lender reviews both firms’ agent rosters and company dollar and asks for a retention plan for the acquired agents.
Common Mistakes to Avoid
- Valuing a brokerage on gross commission income instead of company dollar
- Treating a forgivable conversion note as free money rather than contingent debt
- Ignoring agent concentration and retention risk in an acquisition
- Underestimating rebranding, technology and transition costs
- Leaving too little working capital for the gap between contract and closing
- Overlooking the ten-year term and limits on early termination
- Failing to plan the broker of record and licensing transition
For more pitfalls that apply across franchise systems, read the franchise loan mistakes that cost owners the most.
Next Steps to Finance Your Better Homes and Gardens Real Estate Franchise
Step 1: Clarify your path. Decide whether you are converting your own brokerage, buying an existing franchised firm or opening a new office.
Step 2: Review the FDD with advisors. Study Items 5, 6, 7, 10, 17 and 19, the franchise agreement and any conversion note with a franchise attorney and accountant.
Step 3: Organize your financials. Gather tax returns, profit and loss statements, commission reports and an agent roster with production history.
Step 4: Talk with a financing specialist early. Discuss whether an SBA 7(a) loan, a conventional loan or a working capital line fits the deal.
Step 5: Build projections. Model company dollar, the capped royalty, marketing contributions, rent, staff and a realistic agent retention and recruiting plan.
Step 6: Apply and coordinate approvals. Submit the loan package and align closing with the franchise agreement or transfer approval and any licensing changes.
Step 7: Close and manage the transition. Communicate with agents, complete rebranding and keep working capital in place for the first months.
Better Homes and Gardens Real Estate Franchise Loan FAQs
How much does a Better Homes and Gardens Real Estate franchise cost?
Costs depend on whether you convert an existing brokerage, buy a franchised firm or open a new office. Item 7 of the current FDD gives the estimated initial investment, and an acquisition adds the purchase price.
What is the franchise fee?
The franchise agreements require an initial franchise fee for the principal office. Item 5 of the current FDD lists the amount and any conditions.
What royalty does Better Homes and Gardens Real Estate charge?
The parent company’s annual report describes a capped model for this brand, generally 5% of commission income, capped per independent sales agent per year, with the cap adjustable annually. Confirm the current terms in Item 6 of the FDD.
Is Better Homes and Gardens Real Estate eligible for SBA loans?
Yes. The brand is listed on the SBA Franchise Directory under code S3096 with no special conditions. Each borrower must still qualify under SBA and lender standards.
Can I finance the purchase of an existing franchised brokerage?
Yes. SBA 7(a) and conventional loans can finance goodwill, working capital and transition costs, subject to franchisor approval of the transfer and the lender’s review of the firm’s history and agents.
Does the franchisor offer financing?
The parent company describes conversion notes and other note-backed funding that may be forgiven over the agreement’s term if revenue thresholds are met. Review Item 10 of the current FDD for the franchisor’s financing disclosures.
How long is the franchise agreement?
The parent company’s annual report states that new domestic franchise agreements generally have a term of ten years, and franchisees generally cannot terminate early except in limited circumstances.
Do I need to be a licensed broker?
The brokerage must operate under a properly licensed broker as state law requires. If the owner is not the broker of record, lenders will want to see who is and how that role is secured.
Can a first-time owner get a Better Homes and Gardens Real Estate franchise loan?
Yes, if the buyer brings relevant experience, often as a top producer or managing broker, along with equity and a plan to retain agents. First-time owners buying an existing firm usually present a stronger case than those opening from scratch.
Can I convert my independent brokerage?
Conversions are a central part of how the brand grows. Financing for a conversion usually covers rebranding, technology and working capital rather than a purchase price.
What documents do I need to apply?
Expect to provide tax returns, profit and loss statements, commission reports, an agent roster, a personal financial statement, the FDD and franchise agreement, the office lease and projections.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations. For an existing brokerage, rely on its actual financial statements and commission records.
Final Thoughts
A Better Homes and Gardens Real Estate franchise loan finances people and production more than property. Owners who understand company dollar, the capped royalty and any conversion note, plan carefully for agent retention and use the brand’s SBA directory listing where it fits give themselves the best chance at a smooth closing, whether they are converting, buying or opening a new office.
US Professional Funding helps brokerage owners and franchise buyers finance acquisitions, expansions, working capital and refinancing. Learn more about our franchise financing and real estate brokerage financing solutions.
