Franchises offer a great opportunity to individuals that are looking to own their own businesses while building off of the success of an already established business. Becoming a franchisee offers you the systems, support, brand recognition, and allows you to tap in to the already existing success of the business (without having to build something from the ground up).
Franchisees get to skip a lot of the typical aspects of a startup business, like incorporating or trademarking, and can really save a lot of time and money and a lot of the problems that come with starting a business. If you want to start your own property management business but you don’t want to start completely from scratch, franchising may be right for you!
Step 1: Choosing the Right Franchise
The first step in becoming a franchisee is to choose which franchise is right for you. Because you are interested in property management franchise opportunities, you have a few more restrictions to consider that aren’t typical with other franchises.
Most property management franchises will assign each of their franchisees a list of zip codes that they are restricted to doing business in. This allows franchisees to do business in close proximity to each other without having to worry about competing with their fellow franchisees.
You also have to consider the startup costs associated with owning a franchise. Most property management franchises charge $30,000 to $50,000 for the franchise fee alone, and require you to have an additional $50,000 or so in liquid capital to dedicate to starting your business.
Remember, becoming a business owner is an investment of both time and money; as a franchisee you will want and need to enjoy going to work in order for things to be successful. Ask yourself ‘Could I see myself doing this every day for the next 5 to 10 years?’
Step 2: Impress the Franchisor
Most property management franchises receive hundreds of calls from prospective franchisees, and out of those hundreds only accept a tiny percentage of them as franchisees. If you are serious about becoming a franchisee then the best thing you can do is to thoroughly research the company and go out of your way to exhibit a high level of professionalism and responsiveness.
During the vetting process for potential franchisees the franchisor is paying attention to things like punctuality, dependability, and preparedness. Not only do they want their franchisees to be dedicated professionals, they also want to feel good about bringing them in to the company and letting them interact with their other franchisees. If the franchisee shows themselves to be dependable, a good communicator, and sincerely interested in the franchise, then they have have a good chance of making it through the vetting process and getting hired by the franchisor.
Step 3: Negotiating with the Franchisor
Another obstacle in becoming a property management franchisee is drafting the contract with the franchisor. Before committing, it is wise to consult an attorney to assist with the contract and the Franchise Agreement.
Franchisees may not have much leeway in terms of changing the contract or the Franchise Agreement, but it is very important to know what to expect from the business relationship.
The Federal Trade Commission requires that all franchisors have and provide a Franchise Disclosure Document (FDD) to its potential franchisees. The FDD is a comprehensive collection of information about the franchise, the company background, management team, total investment required, breakdown of expected costs, and more. Franchisees may want to have a lawyer look over the FDD.
Step 4: Financing the Franchise
Financing is a necessary part of any business startup, and it is important to be aware of all of the costs of starting a new property management franchise upfront. While some franchisees have the ability to finance their business with their personal savings, most franchisees will need an outside source of funding.
Most franchisees aren’t in the position to take on investors to help with financing the business, but there are many other sources of financing available in today’s world. Getting a “loan” from family and friends may be a good place to start, as this will have better interest rates and a better timeline for paying it back.
Personal loans and credit cards are also an option if the franchisee has good credit, but it puts the franchisee’s personal assets at risk if the franchise fails.
Franchisees may also get a small business loan or grant. In the current economy these are harder to come by than other options, but there are many options for funding your franchise start-up.