The vacation rental franchising model is currently all the rage among owners of short-term rental properties. Both founding a franchise and joining one have many benefits, but there are also risks to be aware of. Let’s explore in detail what vacation rental franchises are, how they operate, the benefits and drawbacks of joining (or starting) one, and whether you should think about a franchise opportunity.
What is a franchise for vacation rentals?
A vacation rental franchise is a business model that offers property owners the framework, procedures, and tools they need to launch their own vacation rental business while upholding the franchise’s overall reputation. This reduces many risks associated with being a first-time business owner while enabling property owners to scale their operations and generate more revenue. The franchise business concept itself is not novel and is used in various sectors (think; Marriott in the hospitality industry).
How do franchises for vacation rentals operate?
The franchisor and the franchisee are the two main parties to a franchise agreement. The franchisor is the one who permits to use of the trademark, operating procedures, and corporate structure. On the other side, a franchisee is a company owner who purchases the license to use a brand’s name to grow their vacation rental property business.
To access the systems, assets, and brand of the franchise, you must pay the franchise fee and ongoing royalties if you decide to become a franchisee. What activities are you in charge of? Anything that calls for your actual presence on the site, such as cleaning, maintenance, and welcoming visitors.
There is often a preliminary “get to know you” time between the two sides before a franchisee purchases a franchise to make sure the agreement is a suitable fit for both. You can anticipate going through an onboarding and training process after that before managing your properties.
pros and drawbacks of signing up for a franchise in vacation rentals
There are advantages and disadvantages to weigh before launching a new company venture. After all, our goal is to support you in making the wisest business decisions possible.
Pro: You’ve already done most of the hard work
It can be quite difficult and time-consuming to launch your vacation rental company from scratch. A significant portion of this labor will already be completed for you if you join a vacation rental franchise, which is one of the largest benefits. Since the brand is already well-known, it is not your responsibility to create a logo, market it, or acquire new customers by word of mouth. Getting involved with a well-known brand right away provides you legitimacy, which can make the process of launching your company much easier than going it alone. Not to mention that you have access to their systems, which have already been shown to be effective (accounting, marketing, management, etc.).
Con: It demands a financial investment that can be rather large.
A franchise acquisition is exactly that—a purchase. In addition, you’ll have to continue paying the franchisor royalties to use their brand. Depending on the particular contract, the financial hardship this may cause will vary.
Having said that, purchasing a franchise can frequently be much more cost-effective than beginning from scratch. Regarding royalties, think about how much it would cost you to procure all of the services you would have access to through a franchise on your own.
Advantage: You can reach out to existing clients.
As you are probably already aware, the vacation rental property sector mainly relies on marketing and word-of-mouth referrals, which can be a drawn-out, laborious process. Gaining access to a franchise’s established clientele is a huge advantage. Being the new kid on the block doesn’t put you at risk of losing customers because the franchise brand is already well-known and reputable.
Cons: Your flexibility may be limited.
When you sign up for a franchise, you promise to follow their rules and uphold all of the conditions outlined in your contract. Some people may feel relieved because it relieves them of those obligations. Others, however, might feel it restricts how you can conduct your vacation rental business. Researching the franchise, you’re considering joining is essential to ensure your ideals line up.
Generally speaking, a franchise won’t be a suitable fit for your business if you don’t want to support it as a consumer. Alternatively, if you agree with their branding, company strategy, and messaging, it can be a good choice to take into account.
Pro: There is a system of internal assistance.
You can anticipate continued assistance from the franchisor in the form of training and access to exclusive resources as a franchisee. This is great news if you’re new to the vacation rental property business and need a little more assistance in the early going. Additionally, it’s a great chance for you to learn and grow, which will ultimately make you a better property manager.
Cons: You must sign a contract.
Research is necessary before committing because the duration and terms of franchise contracts vary greatly. You must be sure about your choice because you will be locked in for X number of years. This means that if learning about rental property management and getting a glimpse at how the big dogs run their businesses are the only things drawing you to a franchise, you might want to think twice. This is a commitment that will last for a while.
Should you launch your franchise for vacation rentals?
Okay, so investing in a franchise for vacation rentals isn’t the best course of action for you. You already have a solid reputation in the short-term rental market and want to grow it even more. Consider the other side of the coin and open a franchise for vacation rentals.
What is needed to start your franchise?
A proven business plan that can grow with you is the most important requirement for starting your franchise. The next step is to start drafting a franchise agreement while seeking legal advice to determine what will be legally required of you as the franchisor.
Best practices for running a vacation rental business
Here are our top tips for running your own franchised vacation rental business.
Clarify your procedures.
You must first clearly understand your processes for your company model to be reproducible (which is the foundation of the franchise model). Everything should be straightforward, simplified, and simple to duplicate, including marketing tactics, bookkeeping, and guest communication standards. Before hiring your first franchisee, you might consider conducting a “test run” to ensure all the problems are ironed out. To identify any areas where your materials should be made clearer, ask a coworker to review them from the perspective of a possible franchisee.
Create a brand that customers will remember
Consider a moment when you stayed in a hotel or Airbnb and had such a great time that you would recommend it to a friend or go back for another vacation. What exactly about their property did you find to be so memorable? When developing your brand, try to include some of those components. Creating this enjoyable, memorable travel experience for first-time visitors is the key to converting them into repeat visitors.
Always be on the lookout for possibilities for advancement
Franchises for vacation rentals are ultimately all about growth and expansion. You must continue to hunt for these expansion chances if you want to scale your business. This can take the form of finding real estate investors who would be suitable franchisees, investing in new areas, finding ways to streamline operations, etc.
Connect with current vacation rental franchise owners.
Connecting with others who are already in the business can help you learn the most about franchising and expand your vacation rental franchise. These relationships are the ideal setting for getting advice, bouncing ideas off, and asking questions.
Accept distributing tasks
You can see a gradual decline in your free time as your vacation rental property management enterprise expands. Make sure you’re assigning jobs when you can to support the growth. We realize it’s simple to fall into the “I’ll just do everything by myself” mentality, but trust us when we say that delegation is the best course of action in the long run.
Franchises with the best vacation rentals
Here are a few of the top examples of vacation rental franchises that are now dominating the market.
A sizable vacation rental franchise called iTrip Vacations was founded in Panama City Beach, Florida, in 2008. A manager of short-term rental properties who wanted to expand their business created the organization, which has since grown to be a multimillion-dollar franchise. They are one of Florida’s leading franchisees for vacation rentals.
Pass the keys
Pass the Keys, a London-based startup, was established in 2015 and has had excellent growth despite the pandemic’s difficulties. Because they have a reputation for giving its franchisees exceptional training and tools, they are a great choice for newcomers trying to enter the market.
Property Management Inc.
Property Management Inc., a rental property franchise with properties all across the USA, was founded in 2008. Property Management Inc. was recognized by Entrepreneur magazine as the property management franchise with the fastest growth rate in 2018.
Alternatives to franchising for vacation rentals
The financial investment required to purchase a franchise frequently outweighs the benefits of having access to exclusive resources. For those property managers who wish to learn how to expand and develop their vacation rental business, Lodgable offers countless blogs full of great free information.
The tools we offer property managers at Lodgable, like our Website Builder, Channel Manager, and Property Management Software, help them save time and money, increase bookings, and automate their operations to the greatest extent possible. These tools are ideal if you appreciate expanding your knowledge without committing to a franchise.
Are franchises for vacation rentals right for you?
In conclusion, purchasing a vacation rental franchise can be the best course of action for your company if you want the protection that comes with an established brand. If you’re just starting as a property manager and want the added support provided by a franchise, buying one can be a suitable alternative.
Alternatively, if you already manage vacation rental properties and your next step is to grow, you should consider taking on the opposite position as a franchisor.