Comparison of Property Management Franchises
The Space
There are 4 active residential property management franchises:
I have friends who own property management franchises, so please don’t take this post as bashing the franchisors, or saying anyone who signs up for a franchise is foolish. Franchises are a great solution for some people and have delivered outstanding outcomes for a percentage of their customers. The model obviously works and has been around a long time.
However — I became frustrated with the lack of transparency when trying to do some basic research on the options and costs.
Are you new to the space and looking for a broad overview of the property management industry? I wrote up a huge article just for you. Read it here.
The Facts
I decided to go hardcore and do a deep dive. In this post I will share what I found. To find this information, I poured through the “Franchise Disclosure Document” (FDD) for each franchise. Each of these documents is 300 to 400 pages long. And the franchisors do not make them easy to locate; I had to go through arcane government websites to even get access to them. What you see below is taken directly from the most recent FDDs published by each franchise (year 2022).
Here is what I found.
The fine print: Please note these are summary figures only, provided for discussion and as a jumping-off point. Do not pick a franchise based on this information. Do your own research and hire a competent franchise attorney if you are considering a property management franchise. I have no association or affiliation with any of these companies. Some of these figures are estimates, rounded, or inferred from other data.
A few explanations:
“RPD” is revenue per door (per month). So if an franchisee has 275 units under management and the average RDP is 300 (as in the case of RPM), that implies the average affiliate has a gross annual revenue of $990,000.
These figures are not universal for all franchisees. There are negotiated deals, minimums, outliers, etc.
Renter’s Warehouse is no longer selling franchises.
Read Them For Yourself
RPM FDD [pdf]
PMI FDD [pdf]
Keyrenter FDD [pdf]
All County FDD [pdf]
My Personal Opinions
Franchises can provide great value to the right business owner. However…
At present, there is little value in a national property management brand. None of the franchisors have achieved enough scale to inspire loyalty or even recognition within the general public. In fact I would argue that the average property owner would prefer to work with a local business over a national company headquartered elsewhere.
The up-front and ongoing costs associated with a traditional franchise make things unnecessarily difficult for the average entrepreneur. Property management margins are relatively small (the average was 6% as of 2019); giving up 7% is a HUGE ask. What value is being delivered for this cost? Maybe a lot, maybe a little.
Franchises are sold using brokers that make huge fees on each sale (often, a huge percentage of the up-front fee goes directly to the person who sold the location). Their incentive is to “move units”, not set up aspiring small business owners for success. This doesn’t mean franchises are terrible; just be aware of the incentives of the person you will be dealing with.
My company RL Property Management has grown from 0 to 700 units under management in Columbus, Ohio. In exploring ways to both expand geographically, and make our playbook available, we seriously considered standing up a new franchise in the property management space. That’s part of what inspired this research.
In the end I decided it wasn’t the right model for us. We’re going a different route.