Holiday rental franchises: all you need to know
Is a holiday rental franchise right for you? Have a look at this form of property investment and learn the pros and cons.
September 2024
Sometimes, it can be hard to rent a holiday flat and make a profit, which makes the franchise model quite appealing. As a franchisee, you’ll be running your own business while remaining part of a bigger organisation. This is a tried and tested business model in many industries, but how does it work in the world of holiday rentals? More importantly, is it right for you? Let’s investigate…
What is a holiday rental franchise?
A holiday rental franchise is a particular kind of business model. It connects property owners with a larger business. The property owner does not become an employee. Instead, they link their holiday rental with the larger company, adopting its branding and taking advantage of its existing systems and resources.
There are many examples of franchises in other industries. Perhaps the most famous are fast food chains, such as McDonald’s. The brand remains the same wherever you go, but each branch is run by an individual franchisee. In the holiday rental industry, the idea is the same, but with one crucial difference. Fast food chains tend to still own the land and buildings in which their franchisees operate. That isn’t usually true of holiday rentals.
How do holiday rental franchises work?
At the heart of the franchise model is the contract between the franchisor and franchisee. The franchisee must pay a fee as well as ongoing royalties. In exchange, they join the franchise family, with the ability to use the franchise’s brand, systems, structure and resources.
The franchisee continues to be responsible for the day-to-day running of the business. That means taking care of customer services like greeting guests, along with maintenance and cleaning.
Why should I rent my holiday home through a holiday rental franchise?
Franchises are a popular business model, particularly for people who are just starting out and want some help getting their holiday rental property up and running. Here are some of the advantages of joining a franchise:
- You’ll be part of an established brand. If you choose to join a holiday rental franchise, you won’t need to start from scratch with marketing or designing a brand — it’s all done for you. This makes it much easier to advertise your holiday home.
- You may find it easier to run your business. You’ll benefit from the franchise’s systems, which include things like management, accounting and so on. If you don’t have experience in the world of business, that can really be a lifesaver.
- You may find it quicker to get those first guests through the door, as they’re already familiar with the franchise brand. In fact, some holiday rental franchises in the UK and beyond have loyal customers who keep coming back and specifically seek out that brand.
- You’ll find a built-in support system. If something goes wrong, you’ll be able to pick up the phone and get help from the franchisor. Many franchisors also offer their franchisees training and development, which is great if you plan to turn renting holiday flats into your full-time career.
What are the disadvantages of joining a holiday rental franchise?
Sounds good? Before you sign on the dotted line, make sure you’re truly comfortable with what’s on offer. Here are some problems that you may face if you join a franchise:
- You will need money to open a holiday rental franchise. Not only will you need to pay a fee, but you’ll also be paying ongoing royalties. Each franchisor has its own system with its own levels of payment, so make sure you’re comfortable with the amount you’ll be adding to your outgoings.
- You’ll have to meet the holiday rental franchise requisites. This can limit your flexibility and freedom, as you’ll be aligning your business with an organisation that has its own particular branding and expectations. For some, this is a real blessing. However, if you value your creativity, it could feel stifling.
- You have to commit to a contract. Most franchisors will expect you to be a member for a certain number of years, and buying yourself out of the contract could be extremely pricey.
- You’ll lose some of the autonomy that being a small business owner brings. You may find that you have to commit to the franchise’s particular offers and promotions, even if you don’t personally care for them. For that reason, it’s essential to choose a franchisor that fits your personal values.
Going it alone
If you don’t like the idea of joining a franchise, it’s still possible to have a successful holiday rental business on your own. However, you’ll need to think carefully about everything that is involved. For example, are you comfortable marketing your property on holiday rental portals? Do you have the ability to create a memorable holiday rental website to attract customers? How will you run your accounts, and do you have experience in fields like advertising and customer service — both of which are crucial to the success of your business?
One happy medium that many rental property landlords find is this: start out as a member of a franchise, committing to a particular number of years. At the end of that time, you may decide to leave, taking your newfound knowledge with you. Of course, if you find that you’re comfortable, you could always decide to stay.
Finding a franchise that suits you
Do you think a franchise is the right choice for you? The first thing to do is look for the right company. Remember, you’ll be signing a contract that lasts a certain number of years, so it’s essential that you choose wisely. Don’t just join up to the first franchise you find, or you may be in for some uncomfortable times ahead.
One of the best things you can do is speak to existing franchisees and see what they say. Look around on review websites, too, but keep in mind that unhappy people are often the most likely to leave comments. See if you can get a clear idea of how the franchise operates, and go over your contract with a fine-tooth comb to avoid coming up against unexpected fees.
A franchise can be a great way to get started in the holiday rental industry, but it’s not for everyone. Regardless of whether you choose to join a franchise or go it alone, with a bit of hard work and the right strategy, you can still find success.