Property Management Franchise- Is the Investment Really Worth it?

One of the best ways to build a successful career in this industry is with a property management franchise. Even though it won’t give you complete autonomy, many will argue that the benefits outweigh the cons.

Here are a few of both, and we’ll leave it up to you to decide.

Pros of a Property Management Franchise

Brand Name- Companies like McDonalds are still around because they allow customers to know they’ll always get a consistent experience. A burger at a restaurant in Georgia will taste the same as one in Washington.

Having a strong brand isn’t always important, but it certainly doesn’t hurt. Especially if you’re targeting commercial real estate rather than just residential.

Training- Even if you have some experience as a PM, a little extra training never hurt. Buying a property management company franchise will give you access to some of the best training in the industry (assuming it’s a good company!)

Business Support and Systems– Entrepreneurs have to wear all kinds of hats. This is especially true in this industry, as you’ll quickly go from helping a tenant with things around the house to researching local rental laws and policies.

Having a franchise company there to help with financial, legal, contractor supervision, and just about any other question is great. And even if they aren’t able to offer the answer you’re looking for, they can always help you find it.

Marketing- When you’re first starting out, the most important thing to focus on is marketing. If potential customers don’t know you exist, how are you ever going to succeed?

Getting the word out isn’t easy, though. Especially if you’re fairly new to the industry and don’t have a large network yet.

That’s where the franchise can come in. Besides just instantly giving you access to a large network, they will also show you how and where to market your services. In other words- they take out a lot of the guesswork- and will sometimes even do the marketing for you.

Cons of a Property Management Company Franchise

Upfront Cost- The biggest hurdle for most potential owners of a franchise is the upfront cost. Regardless of which company you choose to work with, you can expect to pay at least $100,000 in the initial fees and costs. That doesn’t even include the $75,000 liquid cash requirement you’re expected to have to carry you through the startup period.

Royalties– Franchise costs don’t just stop with the upfront fees. You also need to be prepared for the regular royalty fees charged for being able to use their name, training, software, etc.

What kind of numbers can you expect? Seven percent is currently the market rate in the industry. So when you include that 7% fee on top of various other business expenses, you can see that “fat wallet” starts to look a little slimmer.

Limited Flexibility- This depends on the company, but in general you can count on having a limited number of ways to run your business. Your franchiser wants to look good and maintain a certain reputation, and they can only do that if they control what their franchise owners do.

Of course this was also referenced in the “Pros” category, as some entrepreneurs like the idea of not having to worry about how they’ll do X, Y or Z.

False Expectations- You’ll often hear that it’s much less risky to open up a franchise vs. starting your own business from scratch. But while that may be true, it can lead to a false sense of security.

At the end of the day, there’s no guarantee that you’ll succeed. Running a franchise is hard work, and there’s a good chance you’ll fail if you don’t market yourself well, take care of your customers and tenants, control costs, etc.

So- is a Property Management Franchise Worth It?

There’s no right or wrong answer here- it all depends on your personal preference.

PM companies have been started from scratch with zero upfront cash and gone on to be great successes. Others have gone the “guaranteed” franchise route with lots of cash in the bank and still failed.

You have to look at your own goals and determine what you want. You can either invest a lot of money in training and systems that hold your hand, or save the money and go solo.

About the author

Justin Stowe


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  • I think that opening a franchise is easier as it would allow you to work under a renowned brand name. This would attract a lot of potential customers in the beginning for you.

By Justin Stowe

Subscribe to Updates

Enter your email address to subscribe and receive notifications of new posts by email.

Join 3,665 other subscribers

Follow RentPost