In this FDD Talk post, you’ll learn the following:

• Section I – Estimated initial investment (franchise costs) for a Property Management Inc. franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for a Property Management Inc. franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Property Management Inc. outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Property Management Inc. franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Property Management Inc.’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2019, 2020, and 2021 average, median, high, and low revenue per door and door count for eligible Property Management Inc. franchisees offering residential and/or commercial property management services

• 2019, 2020, and 2021 average, median, high, and low revenue per unit and unit count for eligible Property Management Inc. franchisees offering association management services

• 2019, 2020, and 2021 average, median, high, and low revenue per key and key count for eligible Property Management Inc. franchisees offering short-term rental services

• day 1, 12 months, and 24 months average, median, high, and low revenue per door and door count for businesses that converted their property management business to a Property Management Inc. franchise for the Residential pillar with over 12 months data

• day 1, 12 months, and 24 months average, median, high, and low revenue per key and key count for businesses that converted their property management business to a Property Management Inc. franchise for the Short-Term pillar with over 12 months data

• Section VI – Key ratios, comparables, computations, and analyses for the Property Management Inc. franchise opportunity (exclusive content for Platinum subscribers)

Section I – Property Management Inc. Franchise Costs

• Property Management Inc. franchise costs, based on Item 7 of the company’s 2022 FDD:

• Franchise Fee:  $45,000 to $80,000
• Rent:  $0 to $1,500
• Rental Improvements:  $0 to $2,500
• Deposits:  $0 to $2,500
• Pillar Certification (Training Program, Workshop, PMiLAUNCH, and PMiSPRINT):  $0 to $3,800 for Primary Pillar; $5,000 for each additional Pillar
• Equipment and Business Supplies:  $500 to $3,000
• Computer Hardware and Software (including PMiSOFT, PMiWARE, PMiPrograms, PMiSTR, PMiWorkFlow, Accounting Software, as required):  $675 to $5,950
• PMiBOOKS (different divisions listed; only 1 will apply in the first year):  ResidentialBOOKS (for Doors and Suites): $0 to $18,000; AssociationBOOKS (for Units): $0 to $26,200; VacationBOOKS (for Keys): $0 to $12,100
• Local Advertising Expenses for Period of 3 Months:  $4,500 to $13,500
• Insurance:  $750 to $3,000
• Professional Services:  $0 to $1,500
• EPMC Conversion:  $1,000 to $10,000
• Initial Trust Account Deposit for Short-Term Rental Operations:  $500 to $1,000
• VOIP Telephone Equipment (3 months not including FCC fees and taxes):  $300 to $500
• Additional Funds for Period of 3 Months:  $0 to $20,000
• Total Estimated Property Management Inc. Franchise Costs:  $53,225 to $205,050

Section II – Property Management Inc.’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Property Management Inc.’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $25,000 to $80,000
• Royalty:  monthly (i) 5.0% of Brokerage, plus (ii) a tiered percentage of Gross Revenue (the greater of 7% or $350, $700, $1,050 based on TSQ, on Gross Revenue up to $35,000; plus 6% of Gross Revenue from $35,001-$75,000; plus 5% on Gross Revenue above $75,001), plus (iii) 0.5% on self-owned doors, units, and suites and 1% on self-owned keys of rent and leasing fees collected
• National Advertising Fee:  2.0% of Gross Revenue
• Local Advertising:  minimum of $1,500 per month and $1,000 per month for each additional pillar (Digital Marketing Program counts toward the $1,500 and $1,000 for each additional pillar per month minimum)

Section III – Number of Franchised and Company-Owned Property Management Inc. Outlets

Franchised

2019

• Outlets at the Start of the Year:  231
• Outlets at the End of the Year:  257
• Net Change:  +26

2020

• Outlets at the Start of the Year:  257
• Outlets at the End of the Year:  294
• Net Change:  +35

2021

• Outlets at the Start of the Year:  294
• Outlets at the End of the Year:  359
• Net Change:  +65

Company-Owned

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2020

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2021

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

Section IV – Background Information on the Property Management Inc. Franchise

17 Things You Need to Know About the Property Management Inc. Franchise

Launches New PMI Purify Program

1.  In late June 2021, Property Management Inc. introduced a new cleaning initiative called PMI Purify to demonstrate to customers that the franchise is going above and beyond to take COVID-19 safety seriously. Marianne Heder, PMI’s short-term rental lead, said, “PMI Purify is PMI’s cleaning protocol for all of our housekeeping teams and every one of our short-term rental properties across the world. These enhanced procedures and guidance share a standardized process and certification program to empower hosts to effectively execute to PMI’s high standards.”

2.  According to Heder, short-term rental spaces live and die by the property manager’s ability to manage the space, and with the COVID-19 pandemic an ever-present concern, PMI wanted to introduce a new, industry-leading gold standard. “We launched PMI Purify because of COVID-19, of course,” she said. “But this wasn’t just a quick fix. We took our time to create a system that educates our franchisees and best practices while certifying every step of the process. Airbnb has its standards, we make sure they meet that but we go beyond. Instead of a five-step program suggested by Airbnb, we created a 10-step program.”

3.  But PMI isn’t just an innovator in new cleaning services, it also offers best-in-class franchisee support. That means that PMI has given hands-on training to the franchisees and employees piloting the PMI Purify program and designed the system to easily add value to franchisee’s existing workflows.

4.  Heder added, “Our vendors will provide the EPA-approved cleaning supplies to franchisees at a much lower cost than they can get on their own. It’s a benefit for franchisees and benefit for our guests because they’re going to use the right cleaning supplies. Not only do we get them the right supplies, but also the right training. Not just the franchisor or the franchisees, but every member of the housekeeping team is trained on our standardized process, which is detailed yet simple and easy to do.”

5.  Cleaning means very little to short-term rental guests if they can’t see what’s been done to their room before they get in. That’s why PMI Purify provides visible indications of the cleaning and uses proprietary software so that property managers can easily verify that processes have been followed. “Our software engages the housekeeping team and the owner to get them all on the same page on the same software,” said Heder. “We use a process called ‘Follow the Wall,’ where we make sure every square inch has been sanitized and cleaned.”

6.  For guests, PMI Purify shows up in little details around the rental property which lets them know the space has been thoroughly sanitized. According to Heder, “Everything inside the property has PMI Purify branding, from a wrapped card with a QR code they can use to read about the process, to the plastic sleeve covering the remote control and a seal over the toilet that shows it’s been deeply cleaned. That gives them the confidence to rent with us.”

7.  PMI Purify isn’t just some jargon members of the PMI team kick around, it’s a real industry standard recognized by titans in the space like Airbnb. “PMI properties listed on online travel agencies, such as VRBO and Airbnb, will feature a PMI Purify logo with the image you see on the website,” said Heder. “Our franchisees who use PMI Purify will also get a logo in their email signature that links to information about the process.”

8.  PMI knows that in the era of COVID-19, guests need to feel confident and secure to feel good about booking short-term rentals. The PMI Purify initiative creates a new standard of clean that, once guests experience it, they’ll expect of every rental room. According to Heder, creating PMI Purify was the brand’s way of protecting customers and franchisees alike during this uncertain time.

9.  On a final note, Heder added, “Our guests and franchisees are kings in our franchise. That’s what matters. Why? Because we care. We really do. We’re in this together. Especially through COVID-19. We’re elevating the industry together because we care about our guests, our owners, making them feel safe and helping them relax and feel confident. Come stay and feel pristine like you’ve been cared for. That’s the goal of PMI.”

Appoints New VP of Marketing

10.  In late August 2021, Property Management Inc. appointed Michelle Luchansky as the new vice president of marketing. Michelle Luchanksy has worked with franchisees of well-known brands as Fazoli’s and McDonald’s, but when she decided to accept a new role as vice president of marketing for Property Management Inc., what sold her was the sense of community the brand exudes. “It’s a top down culture that ripples out across the brand – from its franchisees to the people they serve,” Luchansky said. “PMI really is a family in the sense that everyone is working together to build success. That’s something that really resonated with me.”

11.  Now, at a time when the property management brand is poised for continued growth, Luchansky is focused on raising brand awareness across the country. “It’s such an exciting time for anyone in property management,” she said. “The shift in the way people are working right now means not only are people choosing to move, they’re often choosing to rent. With landlords busier than ever, they’re turning to third-party management companies. But they need companies they can trust.”

12.  According to Luchansky, PMI’s brand promise of effective communication, honesty and integrity, accurate accounting, and availability of management teams is something that sets it apart from other property management companies. She added, “Property managers owe a fiduciary duty to always act in the best interest of the communities or buildings they represent. And that’s something PMI takes seriously.”

13.  For franchisees, that reputation of honesty and integrity is key to scaling their businesses. It’s also something that Luchansky hopes to highlight as she works to build that perception. “It’s very exciting to help take an established brand to the next level,” she said. “Just like you know those golden arches, my goal is nothing less than making Property Management Inc. a household name over the next five years.”

14.  Already drumming up national and local marketing campaigns to get people excited about the brand, Luchansky said the team at PMI has rolled out the welcome wagon for her. Danessa Itaya, president of PMI, said, “We’re thrilled to welcome Michelle to our team. She brings exciting fresh ideas and energy that will help further our goals as we continue our expansion across the country.”

Company History

15.  Property Management Inc. was founded in 2008 by Steve Hart in Lehi, Utah. Hart wanted to create the nation’s largest residential, commercial, and association management franchise network. Before starting Property Management Inc., Hart worked in the real estate industry in land development, construction, and sales. He realized that no matter what the real estate market was doing, the property management sector of the industry remained stable. So, Hart developed the PMI model for a consistent revenue-generating property management business.

16.  From the beginning, Property Management Inc. had strong growth and by 2018, there were over 200 locations in operation around the United States. To help fuel the growth of Property Management Inc., the company acquired a competitor, Book by Owner, and converted units into PMI franchises in 2018. Today, there are Property Management Inc. franchises all around the country.

Entrepreneur’s Franchise 500

17.  Property Management Inc. ranked No. 218 on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Property Management Inc. Franchise (Item 19, 2022 FDD)

• As of December 31, 2019, Property Management Inc. had 259 franchised locations; as of December 31, 2020, it had 296 franchised locations; and as of December 31, 2021, it had 361 franchised locations, including company-owned outlets.

• Based upon data and information for the 2019, 2020, and 2021 calendar years, Property Management Inc. has created the financial performance representations made in this Item 19, detailed in the tables below.

• The material bases for such representations are as follows:

• Property Management Inc. used only actual historical financial figures, provided from either (i) unaudited financial and operating reports submitted to it by its franchises or (ii) Property Management Inc.’s accounting software, for the full calendar year of 2019, 2020, and 2021;

• Data from 36 franchises is not included in the 2019 data, 9 franchises are not included in the 2020 data, and 24 franchises are not included in the 2021 data because the franchise either failed to provide Property Management Inc. with data or the data was incomplete or insufficient;

• There were 67 franchises for 2019, 103 franchises for 2020, and 133 franchises for 2021 whose data related to Doors is not included because the franchises did not manage any Doors, were less than 12 months old, did not participate in the Residential Pillar, or the data was incomplete or insufficient;

• There were 147 franchises for 2019, 204 franchises for 2020, and 254 franchises for 2021 whose data related to Units is not included because the franchises did not manage any Units, were less than 12 months old, did not participate in the Association Pillar, or the data was incomplete or insufficient;

• There were 192 franchises for 2019, 246 franchises for 2020, and 295 franchises for 2021 whose data related to Keys is not included because the franchises did not manage any Keys, were less than 12 months old, did not participate in the Short-Term Pillar, or the data was incomplete or insufficient;

• Other than as listed above, the data from all franchises (including company-owned outlets) for the full 2019, 2020, and 2021 calendar years is included in the financial representations made in this Item 19. The characteristics of the franchised locations included in the financial representations made in this Item 19 do not differ materially from the franchises that may be offered to prospective franchisees.

• In 2021, 1,519 Doors and 13,960 Units were added through 68 acquisition transactions.

• In the month of April and May 2020, franchisees reported an average of 95% of rent collected, versus the standard 97% in previous and pre-COVID-19 months.

Part 1 – Residential and/or Commercial Property Management

• Part 1 shows the actual numbers for High-Average-Median-Low annual income, excluding pass-through maintenance revenue, (“income” meaning total revenue generated by franchisees (excluding company-owned) before any costs or expenses, i.e., royalty fees, advertising fees, etc., have been subtracted) per Door for eligible franchises that use Property Management Inc.’s accounting software or otherwise regularly report their financial and operational information for 2019 (pre-COVID-19 year), 2020 (COVID-19 year), and 2021.

• Part 1 is grouped by all businesses over 12 months (excluding company-owned).

• 165 franchised locations are included for 2019, 189 for 2020, and 204 for 2021. This represents 64% of the 257 franchised locations open as of year-end 2019, 64% of the 294 franchised locations open as of year-end 2020, and 56% of the 361 franchised locations open as of year-end 2021.

2019

Average Revenue Per Door

• Total Eligible Franchises:  165
• High Income Per Door:  $33,892
• Average Income Per Door:  $2,091
• Median Income Per Door:  $1,632
• Low Income Per Door:  $40

Average Door Count

• High:  941
• Average:  88
• Median:  43
• Low:  1

2020

Average Revenue Per Door

• Total Eligible Franchises:  189
• High Income Per Door:  $20,370
• Average Income Per Door:  $2,369
• Median Income Per Door:  $1,768
• Low Income Per Door:  $17

Average Door Count

• High:  904
• Average:  129
• Median:  55
• Low:  1

2021

Average Revenue Per Door

• Total Eligible Franchises:  204
• High Income Per Door:  $29,972
• Average Income Per Door:  $2,870
• Median Income Per Door:  $1,990
• Low Income Per Door:  $151

Average Door Count

• High:  1,197
• Average:  106
• Median:  55
• Low:  1

% Increase Over 2019

Average Revenue Per Door

• Total Eligible Franchises:  24%
• High Income Per Door:  -12%
• Average Income Per Door:  37%
• Median Income Per Door:  22%
• Low Income Per Door:  279%

Average Door Count

• High:  27%
• Average:  20%
• Median:  28%
• Low:  0%

Part 2 – Association Management

• Part 2 shows, for eligible franchises managing Associations that use Property Management Inc.’s accounting software or otherwise regularly report their financial and operational information, the actual High-Average-Median-Low numbers for annual income per Unit for 2019 (pre-COVID-19 year), 2020 (COVID-19 year), and 2021.

• Part 2 is grouped by all businesses over 12 months.

• 78 franchised locations are included for 2019, 85 for 2020, and 83 for 2021. This represents 30% of the 257 franchised locations open as of year-end 2019, 30% of the 294 franchised locations open as of year-end 2020, and 23% of the 361 franchised locations open as of year-end 2021.

2019

Average Revenue Per Unit

• Total Eligible Franchises:  78
• High Income Per Unit:  $900
• Average Income Per Unit:  $188
• Median Income Per Unit:  $129
• Low Income Per Unit:  $10

Average Unit Count

• High:  3,741
• Average:  351
• Median:  110
• Low:  7

2020

Average Revenue Per Unit

• Total Eligible Franchises:  85
• High Income Per Unit:  $3,754
• Average Income Per Unit:  $266
• Median Income Per Unit:  $171
• Low Income Per Unit:  $2

Average Unit Count

• High:  4,233
• Average:  457
• Median:  135
• Low:  3

2021

Average Revenue Per Unit

• Total Eligible Franchises:  83
• High Income Per Unit:  $4,004
• Average Income Per Unit:  $291
• Median Income Per Unit:  $193
• Low Income Per Unit:  $19

Average Unit Count

• High:  4,966
• Average:  590
• Median:  214
• Low:  6

% Increase Over 2019

Average Revenue Per Unit

• Total Eligible Franchises:  6%
• High Income Per Unit:  345%
• Average Income Per Unit:  55%
• Median Income Per Unit:  50%
• Low Income Per Unit:  82%

Average Unit Count

• High:  33%
• Average:  68%
• Median:  95%
• Low:  -14%

Part 3 – Short-Term Keys

• Part 3 shows, for eligible franchises who regularly report their financial and operational information, the actual High-Average-Median-Low numbers for annual income per Key for 2019 (pre-COVID-19 year), 2020 (COVID-19 year), and 2021.

• Part 3 is grouped by businesses over 12 months.

• 36 franchised locations are included for 2019, 44 for 2020, and 42 for 2021. This represents 14% of the 257 franchised locations open as of year-end 2019, 15% of the 294 franchised locations open as of year-end 2020, and 12% of the 361 franchised locations open as of year-end 2021.

2019

Average Revenue Per Key

• Total Eligible Franchises:  36
• High Income Per Key:  $25,866
• Average Income Per Key:  $5,404
• Median Income Per Key:  $3,730
• Low Income Per Key:  $0

Average Key Count

• High:  160
• Average:  18
• Median:  5
• Low:  1

2020

Average Revenue Per Key

• Total Eligible Franchises:  44
• High Income Per Key:  $29,941
• Average Income Per Key:  $5,694
• Median Income Per Key:  $3,854
• Low Income Per Key:  $175

Average Key Count

• High:  181
• Average:  18
• Median:  6
• Low:  1

2021

Average Revenue Per Key

• Total Eligible Franchises:  42
• High Income Per Key:  $21,865
• Average Income Per Key:  $7,463
• Median Income Per Key:  $6,085
• Low Income Per Key:  $125

Average Key Count

• High:  199
• Average:  27
• Median:  8
• Low:  1

% Increase Over 2019

Average Revenue Per Key

• Total Eligible Franchises:  17%
• High Income Per Key:  -15%
• Average Income Per Key:  38%
• Median Income Per Key:  63%
• Low Income Per Key:  37,779%

Average Key Count

• High:  24%
• Average:  50%
• Median:  60%
• Low:  0%

Part 4

• Part 4 shows shows the businesses that converted their property management business to a Property Management Inc. franchise for the Residential and Short-Term pillars with over 12 months data. There were 7 businesses in the Residential Pillar and 7 businesses in the Short-Term Pillar.

A. Conversions Resident

Day 1

Average Revenue Per Door

• Total Eligible Franchises:  7
• High Income Per Door:  $371*
• Average Income Per Door:  $929
• Median Income Per Door:  $1,166*
• Low Income Per Door:  $571*

*Note:  The high, median, and low numbers above are obviously mixed up or incorrect.

Average Door Count

• High:  371
• Average:  188
• Median:  189
• Low:  36

12 Months

Average Revenue Per Door

• Total Eligible Franchises:  7
• High Income Per Door:  $  –
• Average Income Per Door:  $1,309
• Median Income Per Door:  $1,222
• Low Income Per Door:  $  –

Average Door Count

• High:  321
• Average:  199
• Median:  211
• Low:  61

24 Months

Average Revenue Per Door

• Total Eligible Franchises:  7
• High Income Per Door:  $2,215
• Average Income Per Door:  $1,635
• Median Income Per Door:  $1,842
• Low Income Per Door:  $727

Average Door Count

• High:  409
• Average:  257
• Median:  253
• Low:  89

% Increase Over Day 1

Average Revenue Per Door

• Total Eligible Franchises:  0%
• High Income Per Door:  497%
• Average Income Per Door:  76%
• Median Income Per Door:  58%
• Low Income Per Door:  27%

Average Door Count

• High:  10%
• Average:  37%
• Median:  34%
• Low:  147%

B. Short-Term Rental Conversions

Day 1

Average Revenue Per Key

• Total Eligible Franchises:  7
• High Income Per Key:  $14,730
• Average Income Per Key:  $9,409
• Median Income Per Key:  $8,338
• Low Income Per Key:  $3,355

Average Key Count

• High:  143
• Average:  62
• Median:  37
• Low:  2

12 Months

Average Revenue Per Key

• Total Eligible Franchises:  6
• High Income Per Key:  $38,687
• Average Income Per Key:  $18,539
• Median Income Per Key:  $11,871
• Low Income Per Key:  $3,063

Average Key Count

• High:  211
• Average:  56
• Median:  40
• Low:  3

24 Months

Average Revenue Per Key

• Total Eligible Franchises:  6
• High Income Per Key:  $38,069
• Average Income Per Key:  $16,597
• Median Income Per Key:  $13,220
• Low Income Per Key:  $4,954

Average Key Count

• High:  162
• Average:  64
• Median:  45
• Low:  10

% Increase Over Day 1

Average Revenue Per Key

• Total Eligible Franchises:  -14%
• High Income Per Key:  158%
• Average Income Per Key:  76%
• Median Income Per Key:  59%
• Low Income Per Key:  48%

Average Key Count

• High:  13%
• Average:  3%
• Median:  23%
• Low:  400%

Income per Door is comprised of the following:

1. Commercial Doors

• a. Management fees ranging from 2% to 8% of gross monthly rents; and
• b. Recurring or one-time ancillary property management and other real estate services, with fees/charges/markups ranging from $1.00 to thousands of dollars, paid by property owners, tenants, service providers, and vendors.

2. Residential Doors

• a. Management fees ranging from 4% to 12% of gross monthly rents; and
• b. Recurring or one-time ancillary property management and other real estate services, with fees/charges/markups ranging from $1.00 to thousands of dollars, paid by property owners, tenants, service providers, and vendors.

Income per Unit and Association is comprised of the following:

1. Association Units

• a. Monthly management fees ranging from $2.51 to $79.42 per Association Unit; and
• b. Recurring or one-time ancillary property management and other real estate services, with fees/charges/markups ranging from $1.00 to hundreds of dollars, paid by service providers, vendors, and Associations.

Income per Key is comprised of the following:

1. Short-Term Rental Keys

• a. Management fees ranging from 10% to 40% of gross monthly rents; and
• b. Recurring or one-time ancillary property management and other real estate services, with fees/charges/markups ranging from $1.00 to hundreds of dollars, paid by property owners, tenants, guests, service providers, and vendors.

Section VI – Property Management Inc. Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️