The new contract for firms joining or re-signing to OnTheMarket is reported to have a restriction on acquisitions.
It is said to specify that any agency member cannot be acquired or taken over by another agency in future unless the acquiring agency also has all of its branches signed up to OnTheMarket.
This would mean that a large company with hundreds of existing branches currently not with OTM, would have to pay for each of them to join the portal before being able to acquire even a small independent with a handful of offices or even fewer.
One small agency is believed to have attempted to sell to a larger chain, only for the issue to be noticed during the due diligence process; at that point, the acquiring agency withdrew from the deal, reportedly leaving the owner of the unsold company “in pieces”.
According to two agents who have contacted EAT, the effect of the clause in the new contract regarding the acquiring agency’s branches being members of OTM is not immediately obvious to the untrained eye.
EAT has been told that one acquisition deal which did not meet these criteria has nonetheless gone ahead because legal advice to both the acquirer and the acquired was that the clause could not be enforced; however, we have not been able to confirm this.
It is thought the clause in question has only been created since the court meetings of Agents’ Mutual members on September 6 and the formal sanctioning by the High Court of Justice Chancery Division of the decision to demutualise on September 11.
Since that time Agents’ Mutual has made announcements regarding three relatively large companies signing up to OnThe Market.
These are Arun Estates with over 100 branches trading under the Arun brand and under Ward & Partners, Cubitt & West, Douglas Allen and Pitts titles; more recently there was the Chancellors Group with over 50 branches using the Chancellors name and also Anscombe & Ringland and Russell Baldwin & Bright; at the end of last week franchise company Hunters signed its 200 or so branches to OTM as well.
All of these sign-ups were for five years and were dependent on the initial public offering going ahead; no details of the IPO timing or share price have yet been released.
An OnTheMarket spokeswoman told EAT this morning: "A clause ensuring that all members of an agent's group comply with the terms of the agent's contract has existed in substantially the same form since early 2014. We are not aware of it causing any difficulties over the last four years for member agents selling their businesses to larger groups."
There has already been one legal skirmish involving OnTheMarket since the September decision to go ahead with a stock market floatation.
ZPG announced that Henry Adams - an agency with 15 offices in West Sussex, Hampshire and Surrey - was to leave OnTheMarket and rejoin Zoopla and PrimeLocation.
However a statement from Agents’ Mutual then said: “The firm continues to list its properties at OTM in accordance with its current listing agreement and remains a valued member.”
ZPG later claimed: “It is an unfortunate state of affairs for OTM that the only way they can retain their customers is by threatening to sue them and preventing them from maximising their opportunities.”
Over the summer litigation between Agents’ Mutual and Connells’ brand Gascoigne Halman was resolved with a verdict backing the legality of OnTheMarket’s ‘one other portal’ rule.
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The most important thing about independent Estate Agents is their independence, I know the principals of single office agencies who are amongst the most formidable and determined people I have ever met. These individuals build their businesses over many years, often whole careers, they put in long hours and make countless sacrifices providing a service to their communities and security for their families. I can’t even imagine how some of these owners must be feeling reading this article, especially those coming towards retirement and looking forward to selling their businesses for a fair price. Anything that inhibits their ability to do so must be a truly bitter pill, particularly if they were unaware of it at the time they supported OTM and I just wonder what the repercussions will be.
Just another reason not to support OTM - They have shown time and again they are not the agents friend but in fact their enemy.
Couldn't agree more. Since when should a portal dictate whether an agency owner should be able to sell their business? Madness and a sad indictment of where the industry is going.
OTM has pulled the wool over everyone's eyes. Agents who have supported them have been sued, threatened and bullied. Nothing they have acheived has been in the agents interests. Including the IPO if they pull it off which will be in their own interests not the agents. This article is just another example of the lies and half truths told by OTM. Maybe someone should ask them what rate Chancellors and Arun have signed up on. Whilst many fo you have signed 5 year restrictive contracts to pay, OTM are reportedly offering FREE listings to many businesses to get them on board including the likes of PurpleBricks. What could be a bigger slap in the face to independent agents than to get their support on the basis of not allowing online agents to list, only to then turn around and not only allow online agents to list but for FREE!!
Are Donald Tusk and Jean Claude Junker on the board of OTM / Agents Mutual ?
What makes you say that? Only one side is currently looking very foolish in the Brexit negotiations. Hint: it's not the EU.
The certainly havent offered me any FREE listings, what it the exact wording of the restriction on sale clause?
OTM says: "We are not aware of it causing any difficulties over the last four years for member agents selling their businesses to larger groups."
Lol - would we not describe the Gascoigne Halman debacle as 'difficulty' then?
It seems I was one of the lucky ones. Why you may ask? I joined at the end of December 2014 as a Bronze member 1 yr only, cancelling Zoopla, for OTM Jan 2015 start. After 4 months I had no leads from them. I spoke to someone at OTM who agreed to release me from the contract in July 2015 and I paid pro-rata to finish the contract. I went back to Zoopla, and the same day started receiving leads for sales & rentals. Phew!
We got one of the late bird deals £50 (plus vat) per office. Even that is expensive compared to what we get from RM
And no leads for the £50 I assume?
Very little, to be fair just before they announced they were going to do the IPO the leads did start to pick up (for a couple of weeks) then soon as they announced it they stopped.
The cynic in me says they upped the advertising budget to hood wink agents to commit to a further 5 years with the IPO.
The slow death of OTM rumbles on. Not a satisfying spectacle.
When are they set to float again?
All seems to be such an unholy mess, with no structure or direction. Lots of last throws of the dice, but they don't seem to be getting very far with any of them.
I honestly can't believe that any organisation that originally setup with the vision of helping agencies would put such a clause in their contract!
I really do hope that agents can see through the sales pitches and see that this IPO seems nothing more than a final roll of the dice for the original investors to cover their losses and potentially walk away with some money in their pocket! Long term contracts and clauses like this are there to make the initial flotation stack up financially but then what happens after that?
If this was such a great investment/business model then we should have seen significant market share already won from Rightmove and Zoopla by now, given the millions already invested and the backing of many agencies who believed in their original vision!
It's now the turn of the gullible stock market investor to risk their money!
I don't get why agents signed a 5 year lock in if they didn't want to? I didn't. OTM tried and tried but when I asked if my gold loan will be retained as a loan or converted, they said it will be converted anyway, so we didn't sign either a listing agreement of the share lock in. Can't say they were happy about it, but oh well.
I also refused to sign because of the appalling job Ian had done with OTM yet will no doubt get rich out of it.
That said, whilst everyone may slate OTM on here, we all know with enough money behind something you can do what you like and make it work......ask George Soros and his EU puppets.
There is room for a decent portal (unlike Zoopla which is more like an email spam machine) and the we actually get better quality leads from OTM, in fact by a mile.
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