While not all homeowner association management franchises are same, most have similar requirements and restrictions that must be evaluated by a prospective purchaser.
When making this evaluation, the prospective purchaser should compare the advantages and disadvantages of the franchise offering to the alternative which is starting your own independent HOA management company.
I started an independent HOA management company in 1987 and have 33 years of experience running it. I also have 22 years of experience as an HOA and business attorney which has allowed me to consult with clients about various franchise offerings.
In California, after carefully reading an HOA franchise disclosure statement, and the proposed contract, you will likely find the following:
1. You will be required to pay a non- refundable franchise fee. Generally, about 30% to 50%
covers the commission of the salesperson who is attempting to make the sale.
2. You will be required to pay a royalty to the franchise company. Most royalty fees are 5%
to 7% of your gross monthly revenue regardless of your net income.
3. You will be locked into a contract for a period of time. The average length of franchise
contracts is 5 years.
4. If during the franchise contract, you become dissatisfied, you will find it extremely
difficult to cancel the contract. If you sue the franchisor, or the franchisor sues you,
the venue is likely to be outside of California making it expensive for you to litigate.
Most likely the prevailing party will be entitled to be reimbursed their attorney fees.
6. You will likely find restrictions on your ability to sell your business should you ever
decide to do so. In most cases, they will have the right to approve any buyer.
7. The franchisor will have no obligation to assist you in obtaining new HOA accounts.
You will be on your own in most cases.
The alternative is to start your own homeowner association management company.
I can help do that and would be pleased to discuss it with you if you have a sincere interest in starting an HOA management company anywhere in California. There is no cost for the initial consultation.
I created a separate video that you may want to view titled:
Start a Homeowner Association Management Company in California
Call me, Michael Chulak at 818-991-9019 or Email: MChulak@MTCLaw.net