SkyRun's Tech-Driven Franchise Model Attracts ‘High Net Worth Individuals’ for Rapid Growth

Kyle Gjersee, vice president of development for SkyRun Vacation Rentals, has seen a lot of shifts in the franchising landscape over the past 30-plus years. The biggest change, however, has been the gradual move from high-dollar brick-and-mortar franchises to lower-investment home-based businesses.

"You see these non-brick-and-mortar business models and [with] the investment levels low, you tend to attract the less-high-net-worth individuals, and I think that's a mistake," Gjersee said. "They just didn't have to put up a million dollars. They could put up $150,000 and potentially surpass that brick-and-mortar situation without the overhead — the build-out, the equipment, the employees."

SkyRun Vacation Rentals has leaned into its low-cost investment as an asset, using it to attract prospective franchisees who are in the market for an investment with lower risk and faster returns.

"When you start up a SkyRun franchise, you need maybe one employee and that's it. You run it out of your home, so you can get to breakeven a lot quicker," Gjersee said. "But I think people kind of migrate towards, 'I gotta spend a lot of money to make a lot of money,' and I don't think that's the case anymore. I think things have really transitioned over time."

Now in its 20th year, SkyRun offers vacation rental management through its tech-driven approach. It automates the booking process and outsources housekeeping and maintenance, which allows franchisees to focus on building their business. SkyRun is focused on scaling through high-quality owner-operators; the brand currently has 47 territories divided among 45 franchisees.

When it comes to finding the right candidates for franchising with SkyRun, Gjersee says passion and enthusiasm trumps investment level and industry experience.

"You don't have to have knowledge in the short-term rental business," Gjersee said. "That's our job. I think you have to be a go-getter in franchising ... You know, you wake up every day and you've gotta be passionate about it. You've gotta love it."

A summarized transcript of Taunton’s interview with 1851 Franchise’s Nick Powills has been included below. It has been edited for clarity, brevity and style.

Powills: All right, Kyle, we're going to start with your story first ... How did you accidentally fall into franchising? What's your franchise story?

Gjersee: That's a crazy question. Right out of college, I fell into franchising. I was working with PepsiCo, and I actually worked for Taco Bell back in the day — they transitioned to a franchise model and I got swept up into it. I've run franchise brands ... It's my 32nd year of being in franchising, which sounds strange.

Powills: You look back at all this time that you've put into this industry ... What has changed the most?

Gjersee: Back in the day, it was all brick-and-mortar — it was restaurants and massage places and things like that — and what I've seen is a transition to lower investment, which kind of leans into SkyRun.

Even when you go to franchise shows, you see a lot less brick-and-mortar and more so of this independent local business. So that's probably the biggest thing I've seen change over time.

Powills: How do you protect the culture of hustle and grit among franchisees if your candidates haven't performed well enough financially to buy a brick-and-mortar? How have you navigated that?

Gjersee: What's interesting with this business model — and you see these non-brick-and-mortar business models with the investment levels low — you tend to attract the less-high-net-worth individuals, and I think that's a mistake.

We doubled the size of our business last year, and what was interesting about that was that we really attracted high-net-worth individuals. They just didn't have to put up a million dollars. They could put up $150,000 and potentially surpass that brick-and-mortar situation without the overhead — the build-out, the equipment, the employees.

When you start up a SkyRun franchise, you need maybe one employee and that's it. You run it out of your home, so you can get to breakeven a lot quicker. And I think that's starting to attract high-net-worth individuals. But I think people kind of migrate towards, "I gotta spend a lot of money to make a lot of money," and I don't think that's the case anymore. I think things have really transitioned over time.

Powills: I think most franchisors make the mistake of changing who their candidate is based on investment. And here, what you're talking about is, "We knew we had to keep the candidate, and the investment aligns with the candidate."

Gjersee: That's a good point. You talk to coaches and brokers and you almost have to talk them into it. But why would they invest that incredible amount of money and break even maybe three years from now? In our business, since you don't have the overhead, you could be at breakeven rather quickly.

Powills: That's another swing of the challenge. Most brokers — call it 70% — are in a volume game and they want to push through the candidates who are going to buy at pace. Instead of showing these candidates a brick-and-mortar school franchise, why not show them this as an alternative where, on scale, we can eventually get to the same numbers. It's just a little bit less risky because of the volume they're investing into.

Gjersee: I think you hit the nail on the  head. It is less risky because you don't have that investment in the building or paying the landlord or whatever it might be.

I really think, whether it's SkyRun or all these lower investment brands, that you could really scale it and replace that income rather quickly versus, "I made this huge investment. I'm waiting over time and, you know, who knows what may happen?"

Powills: So, talk about the business model now. Tell me what is special about SkyRun. How do you guys stand out?

Gjersee: One of the founders used to run all the international IT business for IBM, so technology became incredibly important in this business. We are API-integrated with 60 different channels — Airbnb, Verbo, Bookings.com, you name them all. When we post a property, it shows up on all those sites.

We also operate something called dynamic pricing, which will auto-adjust pricing back and forth depending on demand, seasonality and, you know — Taylor Swift's in town or whatever it might be — because people who self-manage their business don't go in there every day and adjust pricing on their properties, so they're missing out on revenue. So the front end is completely automated.

The back end — think of housekeeping, repairs and maintenance. We outsource that, so you're not hiring housekeepers and things like that. And there's margins in that. Don't think of it as an expense — we mark that up to the guest.

So what does a franchisee do? They do business development, meet with homeowners, go look at the property. We run a lot of analytical tools like AirDNA and PriceLabs that really help them decide if a property is worth bringing into the portfolio. So the franchisee's really focused on business development. The booking side is automated and the back end really is just outsourced.

Powills: Could I get into the business and just hire my sales team and not have to work in the business, or do you want me to be involved?

Gjersee: It definitely is a semi-absentee owner model. Could it be an absentee? For sure.

Powills: What does the franchise landscape for you guys look like? How many units do you have? How many franchisees?

Gjersee: We have 47 territories sold, 45 franchisees — we have a couple of multi-unit. They've scaled to a certain level and then bought a different territory, and that kind of comes into what you're saying. We have an individual in Park City, Utah, who bought into Kiowa, South Carolina, and put a manager that was his friend down there. You can scale it that way.

Powills: Okay, let's conclude this. If there's a candidate who's been watching up to this point, any last things you want them to know about the business?

Gjersee: I would say a few different things. Number one, you don't have to have knowledge in the short-term rental business. Most of our franchisees do not. That's our job.

I think you have to be a go-getter in franchising. I don't care if it's a restaurant or whatever it might be. You wake up every day and you've gotta be passionate about it. You've gotta love it. When I talk to franchisees, what they love is when a guest comes and stays at one of their properties and it's a five-star experience. You gotta be committed to that.

You gotta be detail-oriented, but you could quickly be breakeven. And you never take your foot off the pedal. Our territories are large — they tend to have about 2,000 short-term rentals in the market — and you can be breakeven after 10. Why don't you have 20 or 50 or 100 or 300? Life changing experience.

And you talk about those high-net-worth individuals trying to replace income? It is about bringing properties. That has to be their number one focus, and never stop marketing.

Powills: Part of the beauty of this is that you have people who really care about who their future customer is going to be. You're going to be able to see that in closing the gap between homeowner and property rental, and I think that's part of the cool thing about this business.

Gjersee: I always say it's local presence, national presence. So you have the national — we manage almost 1,400 properties across the country — but we have local ownership, and that is kind of key. Think about a homeowner who has a home in Florida but lives here in Colorado. They are trusting you with one of their biggest assets, so you need to take care of it like it's your own.

Watch the full interview here.