Malta’s leading estate agency was interested in starting its international expansion from Cyprus. As with any company that wishes to expand to a new country successfully, it faced challenges such as the legal framework, unfamiliar cultures, cost-efficiency, adaptation of strategy, policies and documents.
In addition to the general impediments towards expansion, the real estate agent’s profession in Cyprus is closely regulated. As such, they had to co-operate with a local estate agent license-holder without having any form of ownership. Being new in the market, they did not know someone they could trust to enter into such a relationship nor how they could protect their rights. Besides, they did not know the local laws or the local mentality when trying to operate as one company with the same values in both countries.
The company contacted us to assist them in their expansion in Cyprus, and we needed to understand their business model and company culture. For this, one of our partners Eleni Philippou, travelled to the head offices of the company and conducted various meetings with key persons and got a brief induction on purpose, vision, values and processes.
Knowing the values and business model of the company allowed us to locate the right license holder to co-operate with the company (from a minimal pool of candidates). We discussed with the candidate, and after confirming his initial interest, we brought the company and the candidate in touch. At first, we showed the benefits to the candidate from co-operating with our clients. After confirming a willingness of co-operation, we gradually moved on clarifying expectations and assisting with the building of good faith between the parties. As an indication, before signing any document, the candidate visited our client’s headquarters and received their induction training. This built more confidence in the relationship and gave the candidate an actual look into our clients’ culture while allowing more time for the parties to get to know each other more. The candidate himself also took various actions voluntarily before signing the agreement with our clients.
In the beginning, we drafted a memorandum of understanding containing the basis of the co-operation to formalize the discussions and align expectations, which was “fleshed out” as the relationship progressed and went into more details. The parties eventually entered into a joint venture agreement and then a franchise agreement between them containing in many aspects significantly different terms and form than that originally anticipated, which however became possible due to the good faith built in the relationship.
From the beginning, both ours and the company’s goal was to establish a relationship built on mutual understanding, good faith and ultimately, trust. This in fact allowed the parties to agree on important terms very fast and create flexible agreements which could facilitate the growth of the business instead of being too rigid and inefficient. This also aligned with our clients’ culture being one which empowers people.
While formalizing the relationship with the necessary franchise and other agreements between the parties, we also assisted them in every necessary issue, including real estate, taxation, finance, employment, regulatory and corporate issues. We adapted our client’s agreements and documents to conform with Cyprus law using a “minimum intervention” approach that would allow them to have the consistency across cross-country documentation and keep costs lower as they expand.
The clients concluded their first transaction shortly after the conclusion of the matter and are achieving their agreed milestones faster than anticipated.