Independent firm to join forces with Coldwell Banker

GREMPLER'S MAJOR MERGER

August 20, 1993|By Ellen James Martin | Ellen James Martin,Staff Writer

In a deal that will cost the 33-year-old Grempler Realty empire a large measure of independence, the Towson-based company said yesterday that it will merge into the national Coldwell Banker franchise network.

In a transaction valued at more than $2 million, Grempler Realty will purchase franchises for all eight of Coldwell Banker's Baltimore-area offices, which are now owned by the national firm based in Mission Viejo, Calif.

As part of the deal, Grempler will convert its 15 offices into franchises.

The firm will be renamed Coldwell Banker Grempler Realty Inc.

"We got something. They got something. It's a great marriage," said Mary Bell Grempler, the spunky 62-year-old founder of Grempler, a Baltimore institution which at its peak in 1973 commanded about 15 percent of the metropolitan home sale market. Faced with intensified competition, its market share gradually fell to its current 7 1/2 percent.

The addition of Coldwell Banker's eight offices will push Grempler's market share back to about 15 percent, estimated D. R. Grempler, Mrs. Grempler's son, who took over as president two years ago.

Through the deal, due to close Sept. 1, the number of Grempler agents will swell from 800 to 1,450, and the dollar volume of homes sold each year is expected to double to nearly $1 billion.

Rival firms contend that Grempler's merger with Coldwell Banker is an admission that the independent firm was having trouble coping financially with mounting competition.

"Times are tight and Grempler is finding it increasingly difficult to advertise and yet maintain their profitability. Most of these independents are finding it difficult to compete," said Rick DelSontro, marketing director for the Mid-Atlantic States office of Century 21, another franchise network with a major presence in Baltimore.

Grempler officials concede that profitability is a concern, though they decline to disclose financial results.

"This [merger] will put us over the hump in critical mass. I don't think you can survive as a small broker any more," said Donald E. Grempler, Mrs. Grempler's former husband, who heads Grempler Realty's subsidiaries.

Still, Grempler officials insist that their primary motivation is not their private firm's survival, but the long-term growth of the company.

Through the new transaction, Grempler will acquire Coldwell Banker offices in Columbia, Ellicott City, South Towson, Timonium, Dundalk, Bel Air, Perry Hall and Phoenix.

In addition to buying Coldwell Banker's eight Baltimore-area offices, Grempler will pay Coldwell Banker a franchise fee equal to 6 percent of the commissions it makes on the sale of homes. This fee pays for the Coldwell Banker name and national advertising, as well as training and marketing programs. D. R. Grempler, who is expected to oversee the enlarged Grempler company, plans to add three to four new offices to Coldwell Banker Grempler Realty within two years.

Grempler officials hope that the merger will mean money-saving economies of scale, providing, for instance, more of a return on the dollar on print and television advertising. They also hope that the Coldwell Banker affiliation will enhance the new firm's image, especially since the California-based chain does considerable national advertising.

The national name and link with Coldwell Banker's relocation company could prove especially important to Grempler in its quest to sell homes to transferees from out of town, D.R. Grempler said.

Conversion from a locally run independent to a franchise operation is a costly, prolonged proposition, said the elder Mr. Grempler.

To change signs, stationery and other identifying items will take several months and cost between $3,000 and $4,000 per office, he estimated.

"They [Grempler] have to perceive there is some advantage in being franchised," said Ramsey William Flynn, president of operations for O'Conor, Piper & Flynn, a locally owned real estate firm based in Timonium.

Mr. Flynn said his firm, which leads in market share in residential real estate for the Baltimore area, is not threatened by the expansion of Grempler nor by its affiliation with Coldwell Banker.

Grempler is able to purchase the Coldwell Banker properties because of a franchise spinoff program being orchestrated by the national firm in California, Coldwell Banker Residential Real Estate Inc.

That company, now a part of Sears, Roebuck and Co., is itself being sold to the Fremont Group, a San Francisco investment banking firm, in a deal due to close next month.

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