FDD Talk 2020: Real Property Management Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Real Property Management’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 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 263 reporting franchises that were operating for at least 12 months as of December 31, 2019

• 2019 average and median rent for all 255 reporting franchises that were operating for at least 12 months as of December 31, 2019

Section I – Background Information

12 Things You Need to Know About the Real Property Management Franchise

Parent Company Selects Xpressdocs to Deliver Brand Management Solution for Home Services Franchise Group

1.  At the end of January 2020, Xpressdocs, a leading provider of direct marketing and brand management solutions for franchise organizations, announced that it was selected by Neighborly, the world’s largest franchisor of home services brands, to provide brand management services to its franchise network. Neighborly is the parent company of Real Property Management, Drain Doctor, Glass Doctor, Molly Maid, Mosquito Joe, and many more home services brands.

2.  Darrin Rayner, executive vice president of Xpressdocs, said, “Xpressdocs is excited to work with Neighborly and their portfolio of complimentary home services brands. Given our knowledge and experience serving a diverse base of clients across several industries, Xpressdocs is in a unique position to help the Neighborly brands tackle the challenges that many franchisors face when trying to balance brand consistency with the need for franchise owners to be able to create and execute local marketing campaigns.”

3.  Mike Bidwell, president and CEO of Neighborly, added, “In addition to providing our brands and franchise owners with the technology, support and fulfillment solution Xpressdocs offers, we look forward to working with Xpressdocs to discover new, innovative tools to help us cross-promote and unlock the value of the collective Neighborly network of home services experts.”

4.  Several Neighborly brands, including Aire Serv, Glass Doctor, Five Star Painting, Mr. Appliance, Mr. Electric, Mr. Rooter Plumbing, Molly Maid, Mr. Handyman, The Grounds Guys, Window Genie, and Rainbow International recently launched individual collateral on the Xpressdocs solution, with Mosquito Joe and Real Property Management launching later in the first quarter.

Parent Company Appoints New Chief Development Officer

5.  In early October 2019, Neighborly, parent company of Real Property Management and several other home services brands, announced the appointment of Brad Stevenson as the company’s new chief development officer. In his new role, Stevenson will be responsible for developing and implementing the strategic direction of North American franchise development for 13 Neighborly franchise brands. These duties were previously overseen by Neighborly’s executive vice president Robert Tunmire, who is retiring following 44 years of contributions to the company’s franchise growth and development.

6.  Mike Bidwell, president and CEO of Neighborly, said, “Finding the right leader to fill this role, renamed from Executive Vice President to Chief Development Officer, was critical as we continue to expand Neighborly brands worldwide. Armed with 23 years of experience as an accomplished executive, we are confident that Brad Stevenson is the perfect candidate to take the lead on development and communication of Neighborly’s franchise development vision to the organization. We look forward to watching him inspire the development team to reach new heights in the years to come.”

7.  Prior to joining the Neighborly team, Stevenson spent his entire professional career with MillerCoors and Miller Brewing Company after first joining the organization in 1996 as an on-premise Miller marketing representative for United Beverage in Houston, Texas. Throughout his career with the adult beverage industry leader, Stevenson held numerous sales and marketing positions with the company including vice president of grocery, director of business development, and strategy and regional chain director.

8.  Stevenson added, “Neighborly is widely respected as an ideal example of franchising excellence, as the organization continues to grow while still maintaining high service standards across its many brands. Nonetheless, even with the title of world’s largest franchisor of home service brands under its belt, Neighborly has aggressive goals set for continued growth, and I’m excited to work with this organization’s skilled development team to achieve those goals through franchise development.”

Company History

9.  Real Property Management was founded in 1986 by Kirk McGary in Salt Lake City, Utah. A few years before this, while McGary was still in college, he had a choice of a part-time job working with some friends involved with property management or working in fast food; McGary chose property management. After briefly starting a successful career in accounting and software development, McGary decided to return to property management and launched Real Property Management.

10.  McGary spent the next few decades growing Real Property Management around Utah on his own. Around 2005, McGary partnered with another entrepreneur, Doug Oler, who had extensive business experience running multi-unit companies. With Oler’s help, McGary started franchising the Real Property Management concept.

11.  The franchise grew fairly quickly over the next few years and by 2011, there were over 100 Real Property Management locations around the U.S. By 2017, this number tripled and Real Property Management had grown to 300 units around North America. The following year, Real Property Management was acquired by The Dwyer Group, Inc., which is now doing business as Neighborly.

Entrepreneur’s Franchise 500

12.  Real Property Management ranked No. 301 on Entrepreneur’s 2020 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  262
• Outlets at the End of the Year:  276
• Net Change:  +14

2018

• Outlets at the Start of the Year:  276
• Outlets at the End of the Year:  298
• Net Change:  +22

2019

• Outlets at the Start of the Year:  298
• Outlets at the End of the Year:  315
• Net Change:  +17

Company-Owned

2017

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  8
• Net Change:  +1

2018

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  0
• Net Change:  -8

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 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, 2019, Real Property Management had 218 franchise owners who operated 315 Real Property Management franchises.

• This Item 19 includes data from 263 franchised businesses, which were all in operation and reporting sales for the full 52 weeks during calendar year 2019.

• The information provided in this Item 19 does not include data from (a) 31 franchised businesses that opened during the calendar year 2019 and therefore were not in operation for the entire 52-week reporting period and (b) 21 franchised businesses that failed to report sufficient or reliable data to Real Property Management for the entire 52-week reporting period.

• 15 franchised businesses closed during the 2019 calendar year and so they did not report data to Real Property Management for the entire 52-week reporting period and therefore their data is also excluded from this Item 19. Of the 15 franchised businesses that closed during calendar year 2019, 1 business closed after being open for less than 12 months.

• “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, 2019. Also, because these are Annual Revenue results only, no costs or expenses are taken into account.

• 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.

• Monthly reports from 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.

• 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. No adjustments, including adjustments for geographic location, have been made to these reported sales.

• All calculations are based on financial and unit data for the year ended December 31, 2019. This report does not include information about previous periods or any future periods.

Part 1 – Reporting Franchises More Than 1 Year and Less Than 3 Years Old

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