Which is Better? Insurance Franchise or Insurance Branch Office

Looking to get into the insurance business? Good choice. This is a potentially highly profitable, recession-proof business ideal for new agents, captive agents, entrepreneurs, start-ups, and established financial businesses (e.g., mortgage brokers, CPAs, retirement advisors) looking to diversify and add new lines. There are two models to consider:
  • Insurance Franchise
  • Insurance Branch

 

Which offers the most opportunities, with fewer pain points, to start an insurance business? Let’s take a look at:

 

More specifically, in considering Insurance Franchise vs Insurance Branch Office, let’s also examine the following:

What is an Insurance Franchise?

An insurance franchise is a licensed business model where an individual or company is given the right to sell the products and services of an insurance company and its particular brand name. The franchisee pays a fee to use the insurance company’s name and products. In addition, the insurance franchise receives full product support and training from the insurance company.

What is an Insurance Branch Office?

An insurance branch office is a satellite location of an insurance company staffed by a single individual or a branch manager and agents who answer to them. An insurance branch office allows the insurance company to conduct business closest to clients in its geographic area or across the nation. The branch office staff are direct employees of their branch and are salaried and/or commission-based. The branch office has equity in their book of business.

Pros and Cons of Insurance Franchise

The pros of the insurance franchise model include:
  • Franchisees receive full support and training from the insurance company
  • Access to established brand name and marketing materials
  • Opportunity to own a business with a proven turnkey system and recognized brand

 

The cons of the insurance franchise model include:
  • High initial investment cost
  • Some loss of control over business operations
  • Profit sharing with the insurance company

Pros and Cons of Insurance Branch Office

The pros of the insurance branch office model include:
  • Administrative simplicity, easier and quicker to establish
  • Easy to scale, established marketing tools and technologies
  • High commission structure, no expensive franchise fees, low startup costs
  • Service provided for your clients
  • You only have to hire agents/sales people, not service and support agents

 

The cons of the insurance branch office include:
  • Some insurance branches require sales quotas and other standards established by the home office (note that the Compass branch office model has lower sales quotas)
  • Need to report to higher management, not always your own boss
  • Lack of direct control over some aspects of the business, e.g., training

Which is Easier to Start Up?

An insurance branch office is easier to start up. Minimal capital is required with proven marketing in place with associated state-of-the-art technologies. Ability to grow fast from an established network of insurance carriers.

What Has Better Start-up Fees?

While start-up costs vary depending upon location and size of operation, in most cases, you can start a Compass branch with relatively little capital and, in some cases, no fees at all, compared to hundreds of thousands of dollars required by insurance franchises.

Which has Fewer Fees?

There are no costly franchise fees and fewer ongoing fees for an insurance branch office than an insurance franchise.

Which Has Fewer Quotas?

While both an insurance franchise as well as an insurance branch office can require sales quotas, there are no sales quotes for a Compass branch office. You are never forced to sell a policy that doesn’t fit a customer’s needs and budget.

Who Owns the Book of Business?

In a Compass insurance branch office, you own your book, and you can transfer it.

Which is More Limited to How Many Carriers You Can Quote?

The insurance franchise model is limited to the carriers of the franchise. The insurance branch office model has more access to more carriers. For a Compass branch office, for example, you can offer over 20+ carriers for home, business and auto insurance.

What’s More Profitable?

While individual situations are going to vary, overall, the insurance branch model offers more profit potential. You have unlimited potential to grow and unlimited potential to earn.

Which Offers More Freedom and Control of Your Overall Business?

The insurance franchise model imposes more restrictions than the insurance branch model. Franchises require uniformity regarding everything from operations to products and even to resale conditions. The branch office offers more flexibility and the ability to focus on the one thing you want complete control of: selling the insurance products that best fit customer needs and growing your business how you want, not according to some corporate one-size-fits-all mandate.

Get Started with the Compass Insurance Branch Office

When you start an insurance branch office with Compass, a company with more than 20+ years of experience with both the independent and captive agency system, you’ll experience the benefits of a franchise without the pain points. The benefits of a Compass branch agency include:
  • No experience required
  • No costly fees or royalties, low start-up costs
  • High commissions
  • A-Z support, everything from marketing to agent recruiting
  • Online training
  • Established automated marketing technologies to connect with customers proactively
  • Test new markets with risks
  • Equity in your book with a guaranteed buy back
  • Exit agreement at anytime
  • Profit sharing

Open Your Own Compass Insurance Branch

Compass Insurance Agency branch owners see more success than typical business owners or franchise operators with less capital investment. Sign up for our blog for further updates, or contact us today about becoming a Compass branch office.