Branch – means a remote office set up by an estate agency firm. This may be within a State/Region, or outside the State/Region.
HeadQ – means the original firm which was initially formed, being the “mother” of all the branches.
What difference does it make when you join the branch or you join the firm HeadQ?
Putting the Valuers, Appraisers and Estate Agent Rules 1986 aside, what is the difference when you join a branch of an agency compared to joining a stand-alone agency?
Then, it comes to the meaning of Stand-alone agency. A stand-alone agency means it is a single entity – being a soleprop, partnership or sdn bhd which has NO extended entity or subsidiary companies – means NO BRANCHES. Mind you, a soleprop firm can have branches, but individual branch is no difference compared to the HeadQ. In BOVAEP registration of branches, it is still E(3)XXXX/Y – Y being a new branch of the HeadQ E(3)XXXX, like that of Sdn Bhd – E(1)XXXX/Y.
In such nomenclature, E(Z)XXXX/Y is a branch of E(Z)XXXX, and thus follows the instruction of E(Z)XXXX. This is naturally so because otherwise, there is no purpose of forming a branch when the branch does NOT take instruction from the HeadQ.
Read more about “HeadQ loses control of the Branch” here.
In this rare scenario, it means the HeadQ loses control of the branch. In other words, the HeadQ cannot have any say in the finances and management of the branch.
Thus, for you who is joining a branch, do remember that a REN works under the supervision of the REA within that setup – the branch. However, your REA might not have full control of the business because he is under the HeadQ (bosses who are REA as well).
Take for example, when a branch works on a Project Marketing arrangement with a Developer, this branch actually does NOT have much control on this engagement. It is the HeadQ which is appointed. The business owners of the whole entity (HeadQ and Branches) is not at the branch level.
Furthermore, you cannot duplicate the engagement as the HeadQ represents the whole network of business within the country. What this means is – when a branch gets business of engagement to sell a project, it is the HeadQ legal entity that is engaged! You cannot sign another agency contract with a local branch again – it is duplicate! It is like when ABC E(Z)XXXX is appointed to work on a Project Marketing, the whole country of branches of ABC E(Z)XXXX is already engaged!
The consequences of how the engagement is formed also protects the HeadQ from branches losing control. Which means, when a branch breaks away from the HeadQ, the legal engagement is not affected – ie. the Project Developer still holds the HeadQ responsible for the project that is underway. And, of course, money pays directly to HeadQ and not to the branch.
So, you understand the system how HeadQ is strategically able to safeguard its business structure to protect its investment at the branches. Nonetheless, there are instances where the branches disintegrate from the HeadQ and cannibalize on the peripheral businesses to the devastation of the HeadQ.
Nevertheless, the VAEP Rules, 1986 does NOT allow a branch to have more than 50% control by the branch REA. And, a REA can only hold shares (in a Sdn Bhd) at one business entity – being HeadQ or Branch, but not both.
If you want to read more about the laws and regulations on this matter, check out my links below: