The vacation rental franchise model is the talk of the town amongst short-term rental property owners these days. There are some considerable advantages to both joining and starting a franchise, along with some risks to keep in mind. Let’s take a deep dive into what exactly vacation rental franchises are, how they work, the pros and cons of joining (or starting) one, and, ultimately, if you should consider a vacation rental franchise opportunity.
A vacation rental franchise is a business model that provides property owners with the structure, systems, and resources to start their own vacation rental property business while maintaining the brand of the overarching franchise. This allows property owners to scale their businesses and increase revenue while mitigating many of the risks of being first-time business owners. The franchise business model itself is nothing new and exists across many different industries (think; Marriott in the hospitality industry).
How do vacation rental franchises work?
The two key players in a franchise contract are the franchisor and the franchisee. The franchisor is the one who grants the right to the brand, systems, and business structure. On the other hand, the franchisee is the business owner who buys that right to the brand to expand their vacation rental property business under that brand’s name.
If you become a franchisee, you’ll take on the franchise fee and ongoing royalties in order to use the franchise’s systems, resources, and brand. What operations are you responsible for? Anything that requires you to be physically present at the property like maintenance, cleaning, and greeting guests.
Before a franchisee buys a franchise, there is typically an initial “get to know you” period between the two parties to ensure that the contract is a good fit for both. From there, you can expect to go through an onboarding/training process before managing your properties.
Pros and cons of joining a vacation rental franchise
Like any new business endeavor, there are pros and cons to consider before jumping off the deep end. After all, we’re here to help you make the best, most educated decisions for your business.
Pro: A lot of the heavy lifting has been done for you
Starting your vacation rental business from scratch can be very challenging and require a lot of time, energy, and resources. One of the biggest pros of joining a vacation rental franchise is a big chunk of this work will already be done for you. The brand is already established, so it doesn’t fall on your shoulders to design a brand, market it, or gain first-time clients through word of mouth. Latching on to the established brand immediately gives you credibility, which can make the process of starting your business much smoother than going at it on your own. Not to mention that you get access to their systems (accounting, marketing, management, etc.) which are already proven to work well!
Con: It requires a (sometimes substantial) financial investment
Buying a franchise is just that; a purchase. You’ll also need to pay ongoing royalties to the franchisor in exchange for access to their brand. How much of a financial burden this will actually be is dependent on the specific contract.
That said, in many cases buying a franchise can be even more affordable than starting from the ground up. Consider how much it would take to independently outsource all of the services included in a franchise, and you’ll soon come to understand why royalties cost as much as they do.
If you’re still unsure wether a franchise is the right option for you, try using a vacation rental calculator. This way, you’ll be able to estimate how much you’d be bringing home as a franchisee vs. as an independent business owner.
Pro: You can tap into established clientele
As you are likely already well aware, gaining clients in the vacation rental property industry depends heavily on marketing and word of mouth, which can be a long, slow process. A significant benefit of joining a franchise is tapping into their established base of clients. The franchise brand is already known and trusted, so you don’t risk losing clients from being the new kid on the block.
Con: It may limit your flexibility
When you agree to participate in a franchise, you agree to stick to all of their guidelines and uphold all of the requirements laid out in your contract. This can bring a sense of relief for some because it takes those responsibilities off your plate. But for others, it can feel limiting in how you can run your vacation rental business. That’s why it is crucial to research the franchise you’re considering joining to make sure your values align.
As a general rule of thumb, if you don’t want to support the franchise as a consumer, it won’t be a good fit for your business. Alternatively, it may be a solid option to consider if you align with their branding, business model, and messaging.
Pro: There is a built-in support system
As the franchisee, you can expect to receive ongoing support from the franchisor in the form of training and access to proprietary resources. This is excellent news if you are new to the vacation rental property industry and need an extra helping hand in the beginning phases. It is also a perfect opportunity to gain knowledge and experience, making you an even better property manager in the end.
Con: You have to commit to a contract
Franchise contracts vary significantly in terms of length and conditions, so it’s essential to do your research before committing. You’ll have to lock yourself in for X amount of years, so you need to be confident in the decision. This is to say, if the only thing attracting you to joining a franchise is the ability to learn about rental property management and get a peek at how the big dogs are operating their businesses, you might want to reconsider. This is a relatively long-term commitment.
Should you start your own vacation rental franchise?
Ok, maybe buying a vacation rental franchise doesn’t seem like the right move for you. Perhaps you are already well-established in the short-term rental industry and looking to expand your business even further. How about flipping the coin and starting your own vacation rental franchise?
What do you need to launch your own franchise?
The number one thing you need to launch your own franchise is a business model that you know works well and will be scalable in the future. From there, it’s a good idea to consult with a lawyer to understand what will be legally expected of you as the franchisor and to start drawing up a franchise agreement.
Top tips for managing your own vacation rental franchise
Here are our top suggestions to keep in mind when operating your own vacation rental franchise.
Get clear on your processes
For your business model to be replicable (which is at the core of the franchise model), you first need to be very clear on your processes. Everything, including marketing strategies, accounting, and guest communication standards, should be direct, streamlined, and easy to recreate. You may consider doing a “test run” before taking on your first franchisee to ensure the kinks are worked out. Ask a colleague to look through your materials with the mindset of a potential franchisee and give their honest feedback on anything that could be more clear.
Build a brand that clients remember
Think back to a time when you stayed in an Airbnb or hotel and had such a positive experience that you recommended the stay to a friend or returned for another trip. What was it about their property that had such a lasting impression on you? Try to incorporate some of those elements while building your brand. The key to turning a first-time visitor into a returning guest is creating this positive, memorable travel experience for them.
Always be on the lookout for growth opportunities
At the end of the day, vacation rental franchises are all about growth and expansion. For you to continue to scale your business, you need to be on the lookout for these growth opportunities. That can look like property owners who would make good franchisees, new locations to invest in, ways to make business operations more efficient, etc.
Network with existing vacation rental franchisors
The best way to learn about franchising and grow your vacation rental franchise is by connecting with others who are already doing it. These connections are the perfect place to ask your questions, bounce ideas off, and get invaluable feedback.
Embrace delegating tasks
As your vacation rental property management franchise grows, you may watch your free time start to shrink right in front of your eyes. To make the growth sustainable, make sure you’re delegating tasks where possible. We know it’s easy to get stuck in the “I’ll just do it by myself” mentality but trust us, delegating is the best way to operate with the future in mind.
Best examples of vacation rental franchises
Below are a few of the best examples of vacation rental franchises leading the industry today.
iTrip Vacations is a massive vacation rental franchise established in 2008 in Panama City Beach, Florida. The company was founded by a short-term rental property manager who was looking to grow their business and has since become a multi-million dollar franchise. They are one of the top vacation rental Florida franchises.
Pass the Keys
Located in London, Pass the Keys was launched in 2015 and has seen impressive growth even despite the challenges of the pandemic. They are an excellent option for beginners looking to break into the market because they are known for providing their franchisees with fantastic training and resources.
Buying a franchise requires a big commitment, and many times the long-term commitment isn’t worth the access to the proprietary resources. Alternatively, the Lodgify Academy is an excellent option for both beginner and experienced property managers who want to learn how to build and scale their vacation rental business. You can also check out these 21 Short Term Rental Courses to Gain Expertise.
Here at Lodgify, we provide property managers with tools like our Website Builder, Channel Manager, and Property Management Software that all help you save time and money, grow your bookings and automate your business as much as possible. These tools are perfect if you like the idea of increasing your knowledge without committing to a franchise.
Are vacation rental franchises made for you?
In closing, buying a vacation rental franchise might be the next best step for your business if you want the security that comes with an established brand. Buying a franchise could be a good option if you’re just getting started as a property manager and want the extra support offered by a franchise.
Alternatively, if you already have a well-established vacation rental property management business and your next step is to expand, you may want to consider assuming the opposite role; franchisor.
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