Property Management Franchises: Pros and Cons, Best Franchises, and More

Joining a property management franchise is an enticing idea for some.

After all, who wouldn’t want expert training, custom software stack, and support that many franchises provide? 

Everything you need to get started– you just need to provide the initial investment.

(Which according to property management companies ranges anywhere from a few thousand to tens of thousands. Not to mention the franchise fees and other costs.)

So, is it in your best interest to join a property management franchise? 

What will you get in the partnership? What will you be giving up?

While there are clear positives to becoming a part of a franchise, there are also serious drawbacks that need to be considered.

Let’s talk about those now. And, along the way, help you get clarity about whether it’s the right move for you.

5 Things to think about when considering franchising

Here are five of the most important things to consider when weighing whether to get started with a property management franchise or not: 

1. Property management franchise costs

First, let’s identify the elephant in the room: the fees (and other associated costs).

When it comes to cons, this is really it. However, it’s a big one that will turn away most.

That’s either because they can’t afford it or because they feel it isn’t worth it. 

There are a few costs related to working with a franchise, all three of which are important to understand:

A cut of revenue

The primary franchise fee associated with doing business with a franchise requires you give over a percentage of your revenue.

This typically lasts so long as your relationship with the franchise remains. 

The amount itself can vary wildly depending on the company and the full agreement you make with them.

Franchise fees for use of resources

A free many aren’t aware of before considering working with a property management franchise, some charge for use of their various resources.

Exactly what this includes depends on the company, but fees can include things like:

• Software
• Training
• Marketing
• And renewals

Penalties

Penalties are where the fees of working with a prop management franchise can really start to add up.

Many franchises will also collect fees for things such as late payments and bounced checks.

Other examples of potential penalties include using unapproved suppliers or going outside your agreement in some way such as marketing outside your included area.

2. You’ll get full training

Let’s talk about one of the biggest benefits of working with a franchise: high-level training.

One of the major reasons to work with a franchise is the ability to get up and running in little time by being able to take full advantage of expert training.

Most franchises offer robust online training and ongoing support to get you started and keep you going. Some even offer training on-location at their corporate headquarters. 

This not only helps you get things rolling faster, it also helps you reduce the chance of costly early mistakes, a cost you might otherwise incur if you didn’t work with the franchise.

Keep in mind, however, that you shouldn’t be completely fresh to owning a business. 

You’ll want to have a basic understanding of how things work, including everything from marketing to accounting.

3. Find out what kind of marketing assistance the franchise offers

While ongoing training and everything is great, there is one area that franchises differ greatly: marketing tools and services.

Some franchises will fully handle the marketing, while others will simply give you the tools and resources you need to execute.

Both are fine depending on how much freedom you want, but it’s important to know what you’re getting yourself into before committing. 

4. You’ll have to follow strict franchise rules

Earlier, we mentioned that the one major con to working with a franchise is the cost.

That’s not quite true.

Some find this next one to be a con while others don’t mind at all. However, to some it can feel highly restrictive for the company to impose rules on the way you operate.

And even worse, there is often not only a fee associated with taking advantage of other various services but also fees for breaking said franchise rules. 

Services that a franchise may offer include:

• Marketing
• Leasing 
• Accounting 

Another benefit is that most companies will allow you to pick what services you pay for, meaning you can handle the area you’re strong in while receiving support and training from the franchise for an area you’re weak in.

5. Do you want to be tied to the company’s reputation?

This last point is important to mention as it relates to your business in a potentially big way.

Typically cited as a benefit, though that’s not always the case, by working with a property management franchise you get to benefit from the company’s reputation.

If the company has a great reputation, it will benefit you in finding clients.

However, if they don’t have a great reputation it is going to cost you, or at the very least turn things into an uphill battle.

3 Property management franchise options

There are a lot of property management franchises out there you could potentially work with, but let’s quickly touch on a few of the most notable options.

Check with your local real estate groups to find out about any franchises that operate in your area in addition to these to find an option that works for you.

1. Real Property Management

Real Property Management is the most commonly noted property management franchise and self-professed first franchise in property management. 

The company has been around for more than three decades and franchising now for nearly two of those.

Currently, the company has roughly 350 franchises within its umbrella.

2. All County Property Management

All County Property Management is another option for those specifically in residential property management and who include a laundry list of services. 

Training includes multi-day sessions at its corporate headquarters in St. Petersburg, Florida as well as robust web tools for ongoing support.

The company has been around since 1990 and franchising since 2008. It now has roughly 70 locations.

3. PMI

Property Management, Inc. is another popular choice, especially for those in residential property management.

They offer a variety of services, though fees come with each. They offer their franchisees ongoing support and online training. 

Started in 2008, the company now has roughly 340 locations.

What is the average profit margin of property management companies? 

According to the National Association of Residential Property Managers (NARPM), the adjusted profit margin for the average property management company is 6%.

The unadjusted percentage is 10%, with a wide array of margins reported in the study, all the way from -16% to +25%:

To franchise or not to franchise?

While everyone’s situation is different, franchises offer certain very clear advantages and disadvantages.

Only you can decide if franchising is a good option for you, but we hope we made those pros and cons clear and what becoming part of a property management franchise entails.