Franchise agency pulls plug on underperforming offices

Winkworth has revealed that it has not renewed franchises on offices “where our standards were not being met and results were below expectations.”

In a statement to shareholders it suggests that the franchisees in question - specifically Battersea and Clapham, both in South London - may have underperformed on the company’s overall aim to be “a top three contender in local markets”.  

It says that the non-renewal of the franchises in question led to those offices closing, and the sale of the Winkworth Kennington Lettings business to the firm’s sales franchisee. It adds that “while our Pimlico office was [also] taken back, we used our assisted acquisition support strategy to relaunch it alongside an entrepreneurial partner.”

It also says it’s in discussion with “new, proven agents to relaunch in Battersea and Clapham and to not only fulfil the revenue potential of these areas, but also help grow the market share, profile and, ultimately, revenue potential of our other successful South London franchises.”

Winkworth says in the statement that it has the potential to open or relaunch eight new franchises in London over the next 18 months, “where we believe there is still significant headroom for us to grow.”

However, in terms of the company’s 2023 performance, it reported a fall in profits as sales dropped for the second successive year.

Last year sales revenue accounted for 48% of total revenues, down from 54% a year earlier: total revenues were £9.27m, just below the 2022 figure of £9.31m; however, lettings and property management improved by 5% on the previous year, accounting for 52% of the agency’s revenue.

The company says 2024 has had a stronger start than expected, with sales agreed to the end of March 23% ahead of the same period in 2023, bolstered by mortgage providers reducing rates in anticipation of a rate cutting programme by the Bank of England. 

The statement continues: “We expect housing prices to remain broadly flat this year, with new interest instead feeding through into an increase in transactions which have been held back over the past 18 months.

“We have witnessed some price weakening in the rental market with supply increasing (29% ahead of 2023 to end of March 2024) and demand declining (5% behind 2023 to end of March 2024). We believe that affordability ceilings have now been reached and, as financing costs fall from peak levels, some landlords may be tempted back into the market.

“We have already opened three new offices in 2024 in St Leonard's [Exeter], Leamington Spa and Stoke Newington. With the planned new franchisees in London, and our portfolio management initiatives revitalising ambition and growth right across the business, we are excited by the outlook for the current year.”