In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Real Property Management franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Real Property Management franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Real Property Management franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Real Property Management outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Real Property Management’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average and median number of units managed per franchise and annual revenue per unit for reporting franchises more than 1 year and less than 3 years old, reporting franchises over 3 years old, and all 279 reporting franchises that were operating for at least 12 months as of December 31, 2018
- 2018 average and median rent for all 273 reporting franchises that were operating for at least 12 months as of December 31, 2018
Section I – Background Information
14 Things You Need to Know About the Real Property Management Franchise
Acquired by Neighborly
1. At the end of February 2019, Real Property Management’s parent company, Property Management Business Solutions, LLC, was acquired by Neighborly, formerly Dwyer Group. The deal marks the 11th acquisition for Neighborly over the last 42 months. Neighborly now has 20 consumer brands, 18 of them franchised, with more than 3,100 franchisees and eight corporate support centers throughout North America, U.K., and Germany.
2. Mike Bidwell, CEO of Neighborly, said, “Real Property Management is a great fit for Neighborly’s growing family of franchise service brands as it shares our mission to help homeowners protect and maintain their most valuable investment. We look forward to growing that presence, tapping into the services of our existing service brands across North America and providing the best professional solution for property management.”
3. Real Property Management specializes in franchising a system to franchisees who manage single-family homes, town homes, condos, multiplexes, and small apartment buildings without onsite management. Its services include finding and screening tenants, completing the lease agreements, collecting rent, and arranging for any necessary repairs. Real Property Management offices also manage the legal compliance for local, state, and federal real estate law.
4. According to Lukas Krause, CEO of Real Property Management at the time of the acquisition, “For over 30 years, thousands of rental property owners and investors nationwide have trusted Real Property Management offices to take care of their rental property. I am confident that under the guidance and leadership of Neighborly, this organization will continue to grow and provide a great franchise opportunity for prospective and current entrepreneurs.” Krause will continue to oversee the franchise network in the role of brand president within the Neighborly organization.
Appoints New Vice President of Marketing
5. In mid-April 2018, Real Property Management announced the addition of Kent Frogley to its senior leadership team. Frogley brings a wealth of marketing expertise with plans to ignite system-wide development. With extensive experience in growing brands, strategic planning, program development, and profitability improvement, Frogley will play an instrumental role in enhancing brand marketing to achieve company goals, objectives, and strategic vision.
6. Frogley’s prior experience includes global and national roles as CMO in the consumer products space, partner and SVP in the professional services and training field, and marketing leadership in higher education, as well as work for Procter and Gamble, General Mills, and M&M Mars.
7. Frogley said, “In the property management space, Real Property Management continues to lead with strong recognition and accolades in the areas of financial stability, growth rate, and brand power, not to mention customer service and satisfaction levels. I am excited to be a part of this team. With the recent addition of Real Property Management to Neighborly and its family of service-based brands, there are even more opportunities to grow the value and service we offer our customers.”
8. Frogley stepped into the head-of-marketing role with the retirement of Robert Pifke, former chief marketing officer of Real Property Management, earlier in April. In his new role at Real Property Management, Frogley will be tasked with providing strategic leadership and support for the company’s national network of more than 300 locations, in addition to introducing programs that will improve overall marketing efforts.
9. Lukas Krause, president of Real Property Management, added, “We are pleased to welcome Kent to the Real Property Management team. His decades of experience and skills, as well as his passion for the work he does, will be a great addition to our company. I am confident in his ability to help lead Real Property Management toward continued success and growth in 2018 and the years to follow.”
10. Real Property Management was founded in 1986 by Kirk McGary in Salt Lake City, Utah. While McGary was in college, some friends invited him to join their property management business, which provided him with the experience he needed to start his own business.
11. For the next two decades, McGary kept Real Property Management’s growth slow and only opened a few additional offices around Utah. Eventually, McGary realized that no one was operating a property management business on a national level and saw an opportunity to begin franchising the Real Property Management concept.
12. After partnering with another entrepreneur, Doug Oler, who has extensive business experience running multi-unit companies, McGary launched the first Real Property Management franchised office in 2005. By 2011, Real Property Management had opened it 50th franchise.
13. In 2018, as Real Property Management continued to grow across the United States and Canada, Neighborly, formerly Dwyer Group, acquired Property Management Business Solutions, LLC, which is the franchisor of Real Property Management offices. Real Property Management had nearly 300 franchises in the United States by the end of 2018.
Entrepreneur’s Franchise 500
14. Real Property Management ranked No. 491 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Real Property Management franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Real Property Management’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 264
- Outlets at the End of the Year: 262
- Net Change: -2
- Outlets at the Start of the Year: 262
- Outlets at the End of the Year: 276
- Net Change: +14
- Outlets at the Start of the Year: 276
- Outlets at the End of the Year: 298
- Net Change: +22
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 7
- Net Change: 0
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 8
- Net Change: +1
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 0
- Net Change: -8
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- Every month, Real Property Management requests that all franchise owners provide certain financial and other information relating to the operation of their Real Property Management franchise business during that month.
- As of December 31, 2018, Real Property Management had 201 franchise owners who operated 298 Real Property Management franchises. Monthly reports from these franchise owners provide Real Property Management’s only visibility into the financial results of the individual franchise owners’ operations.
- Neither Real Property Management nor its independent certified public accountants have audited or independently verified any of the data submitted by franchisees. Franchisees are not required to use generally accepted accounting principles when reporting these figures.
- In its effort to provide financial performance data for a representative sample of the Real Property Management franchise network, Real Property Management took the following steps to provide the revenue data below:
- 1. Eliminated data from owners in their start-up period. There were 13 franchises whose data were not included because their business was within its first 12 months of operation.
- 2. Eliminated data from non-reporting owners. Data for 6 franchises was insufficient and therefore not included.
- The following charts represent the average and median number of units and average and median revenue per unit being managed by Real Property Management franchisees. The data is broken down according to the age of the franchise, based upon the year the franchise was opened.
- The average and median annual revenue per unit data was drawn from the franchisee reports described above.
- “Annual Revenue” as used in the following charts means the sum of the Gross Sales and Maintenance Revenues for each franchisee during the fiscal year ended December 31, 2018.
- Gross Sales include the total revenues and receipts from whatever source (whether in the form of cash, credit, agreement to pay, barter, trade, or other consideration) that arise, directly or indirectly, from the operation of or in connection with the Business whether under any of the Marks or otherwise, including, without limitation, all proceeds from any business interruption insurance, minus Maintenance Revenues.
- Gross Sales exclude sales taxes collected from customers and paid to the appropriate taxing authority and any other bona fide refunds, rebates, or discounts that Real Property Management authorizes in writing.
- Maintenance Revenues include all gross revenue derived from repairs and maintenance services to real property or equipment, such as, but not limited to, painting, lawn care, preventative maintenance, cleaning, plumbing, and general repairs to real property or equipment, whether such gross revenue is generated by (i) the franchisee; (ii) any business entity that controls, is controlled by, or is under common control with the franchisee; or (iii) any person or family member of any person with an ownership interest in the franchisee.
- Pass-through expenses, such as costs of outside vendors, may not be deducted from Maintenance Revenues without prior approval from Real Property Management, and must be accounted for through your trust account.
- Maintenance Revenues exclude sales taxes collected from customers and paid to the appropriate taxing authority and any other bona fide refunds, rebates, or discounts that Real Property Management authorizes in writing.
- All calculations are based on financial and unit data for the year ended December 31, 2018.