Allstate Insurance Review ~ The Inside Stories

Allstate Insurance Review



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Allstate Insurance Agency Review
Posted by Karl Keller
Business Owner & Franchise Wisdom Editor


Allstate Insurance Company is a proven leader in the competitive field of insurance and financial services. Since 1931, they've built a legacy of innovation, service and success. A key component in that success is their Exclusive Agency force, which is considered among the best in the business. Currently, they're looking for people who are motivated by the challenges and rewards of owning and operating one or more Allstate agencies.

Allstate is ranked among one of the Fortune 100 companies, and their slogan, “You’re in Good Hands with Allstate®,” is one of the most recognized in the business.

There are two ways to become an Allstate Exclusive Agent.  An individual can either purchanse an economic interest in an existing business or build a new one from the ground up.

In a different twist from most franchises, an Allstate franchise has no franchise fees, no sign-on fees or royalties. Additionally, insurance experience is not required but would definitely be a plus. Good people skills (this is a people business after all), business management skills or prior business ownership are highly desirable.

Startup Costs, Ongoing Fees and Financing

Total Investment:
Franchise Fee: None
Ongoing Royalty Fee: None
Term of Franchise Agreement: Franchisor can change conditions with 30 days notice (NOT INDEPENDENTLY VERIFIED)

Financial Requirements:

Net Worth:  N/A
Liquid Cash Available: $40,000

Operations:

Number of employees needed to run franchised unit:  Varies

 

For all the upside created by having no Franchise fees or Royalties, there is a dark cloud hiding out there.  According to a former Franchisee, the contract that you sign with Allstate is completely onesided. Basically, it appears they have no commitments to the Franchisee, but they can take everything or change anything (including the Franchisee's commission rate) at any time with only 30 days notice. This is exactly what they did to their agents in Canada in 2008. Allstate took all the business back by cancelling all Candian agent contracts. They then had the gall to offer agents (some of whom were making over 500,000 a year) an entry level sales and service job with no residual income. They have also used this onesided arrangement to push more and more financial responsibility on agents without increasing commissions. Allstate once paid for office space, computers, paper, phones, tech support, office furniture, and some nice events for agents to meet with Allstate management. All of those things are now paid for by the agent, making a small (start up) agency's profit margin slim at best.

Because agents are private contractors, there is basically no chance of moving into corporate management. Which is okay if you like running a small business, but doesn't offer a "career track".

Bottomline, as with all business endevours, do your Due Diligence.  Something that looks too good to be true (i.e.; no Franchise Fee or Royalty Fee), often is.

 

Key "Pros" Of This Business


No Franchise Fees or Royalties are a big plus
5-8 week training program is free for the Franchisee and entire staff
Insurance policies provide for residual income upon policy renewal


Key Headaches ("Cons") To Consider



Long hours with alot of evening and weekend time required along with alot of cold calling
Competition will be very stiff with a large number of established insurance agents
$40,000 liquid cash is too low for most people. Payroll, rent, equipment, advertising (not to mention living expenses) will require significantly more while building your business
Allstate has a history of being very selective in who they insure, which creates lost sales






Is this the right economy to have a long term 3-5 year investment locked up when sudden shifts are readily forecast? Why not invest a minute fraction of that amount in a business that is actually designed for today's economy?

 


 

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