INDUSTRY BENCHMARK · 16 SYSTEMS · FISCAL 2019–2025
Are real estate franchises a good investment?
Across 16 real estate franchise systems (6,217 franchised units), franchisees exited at an annualized rate of 9.9% in their latest FDD Item 20 filings, while new outlets opened at 5.3%. The median buy-in: a $35K franchise fee, 6.5% royalty, and a total investment of $64K–$244K.
People search for a “real estate franchise failure rate,” but no such official number exists. What franchisors must disclose — in the Item 20 outlet tables of the FDD — is how many franchised outlets were terminated, not renewed, or “ceased operations — other reasons” each year. That annualized exit rate is the honest, measurable proxy: it slightly overstates failure (some exits are retirements or sales) and slightly understates distress (struggling units often sell before they close), but unlike survey numbers it comes from legally mandated disclosures.
9.9%
650 exits / 6,536 units at start
5.3%
344 outlets opened
16
verified FDD extractions
6,217
at latest fiscal year end
$35K
FDD Item 5
6.5%
FDD Item 6
$64K–$244K
FDD Item 7
6/16
systems disclosing an FPR
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 16 SYSTEMS · 16 FILINGS · FISCAL 2019–2025
| Signal | Brand | Index | Grade |
|---|---|---|---|
| STRONGEST | Keyrenter Property Management | Proven & strong | |
| STRONGEST | REAL PROPERTY MANAGEMENT | Proven & steady | |
| STRONGEST | PROPERTY MANAGEMENT INCORPORATED FRANCHISE LLC | Proven & steady | |
| WEAKEST | VALBRIDGE PROPERTY ADVISORS FRANCHISING SYSTEM, LLC | Showing strain | |
| WEAKEST | Realty Executives | Showing strain | |
| WEAKEST | MOTTO MORTGAGE | Showing strain |
HEALTH INDEX: SOURCED 0–100 SCORE FROM EACH BRAND'S OWN FDD ITEM 20 · METHODOLOGY
Real Estate franchise questions, answered from the filings
What percentage of real estate franchises fail?
There is no official failure rate, but FDD Item 20 filings show the honest proxy: across 16 real estate franchise systems, 650 franchised outlets left their systems (terminations, non-renewals, and "ceased operations — other") out of 6,536 open at the start of the year — an annualized exit rate of 9.9% in fiscal 2019–2025. Not every exit is a failure (some are retirements or sales), but it is the measurable floor.
How much does a real estate franchise cost?
Across the latest FDD filings of 16 real estate systems, the median initial franchise fee is $35K (Item 5) and the median total investment range is $64K–$244K (Item 7).
What royalty do real estate franchises charge?
The median ongoing royalty across 16 real estate franchise systems is 6.5% of gross sales, per Item 6 of their latest FDD filings.
Are real estate franchises growing or shrinking?
In the latest Item 20 filings, real estate systems opened new franchised outlets at an annualized rate of 5.3% while franchisees exited at 9.9%. Exits currently outpace openings in this industry — scrutinize individual systems closely.
What is the healthiest real estate franchise?
By the Watch Desk verdict system (computed from FDD Item 20 with an evidence gate), the strongest verified real estate system tracked is Keyrenter Property Management.
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing the numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →