Short-Term Rental in Franklin: Can It Pencil?

Thinking about running a short-term rental in Franklin and wondering if the numbers truly work? You are not alone. Between permits, taxes, HOA rules, and real operating costs, it can be hard to see a clear path to profit. In this guide, you will learn the key rules to verify, how taxes usually work on stays under 30 days, and a simple underwriting model to test if an STR can pencil in Franklin. Let’s dive in.

Start with Franklin’s rules

Before you run projections, confirm whether your property can legally operate as a short-term rental under City of Franklin rules and any Williamson County requirements. City ordinances can change, so your first step is to verify the current code and any registration program details directly with city and state sources.

Below are the items to confirm with the City of Franklin’s municipal code, Planning or Community Development, Code Enforcement, and Finance. You should also check the Tennessee Department of Revenue and Williamson County for tax specifics.

Permit and registration

Most cities require you to register or secure a permit before listing a property for short stays.

Confirm:

• Whether Franklin requires a formal STR permit or registration, and if a business license is also needed.
• Application materials, such as owner ID, local contact details, floor plans, or proof of primary residence.
• Whether an inspection is required and how often it repeats.
• Processing time, renewal cycle, and fees for initial approval and renewal.
• Conditions for suspension or revocation if you violate rules.

Owner-occupied vs non-owner

Many cities treat a primary residence differently from an investment property.

Confirm:

• How Franklin defines “owner-occupied” or “primary residence,” including documentation accepted.
• Whether non-owner-occupied STRs are allowed, restricted, or capped in certain zones.
• If a host must be present during stays for certain STR types.
• Special rules for condos, multifamily homes, ADUs, or guest suites.

Night and stay limits

Night caps and minimum stay requirements can affect your revenue.

Confirm:

• Any limit on the number of rental nights per year.
• Minimum or maximum stay lengths.
• Guest occupancy caps tied to bedroom count.
• Quiet hours, parking, and trash rules related to rentals.

Proximity and density controls

Some jurisdictions limit STRs by neighborhood density or distance between STRs.

Confirm:

• Any caps on STR permits within a zone or buffer rules between permitted STRs.
• Grandfathering rules for existing hosts.

Safety, operations, and on-call response

Expect safety and neighbor-care standards that protect the community and reduce risk.

Confirm:

• Required safety equipment like smoke detectors, CO alarms, and fire extinguishers.
• On-site emergency information and a local contact with required response time.
• Parking standards, trash protocols, and signage rules.
• Any required life-safety or occupancy inspection.

Enforcement and penalties

You need to understand the consequences of noncompliance.

Confirm:

• Fine schedule for first and continuing violations.
• Complaint process, investigations, and appeal rights.
• Remedies such as suspension, revocation, or court action.

Taxes on stays under 30 days

Short stays are typically taxed as transient lodging. In practice, your STR revenue for stays under 30 days can be subject to a combination of state sales tax and local occupancy or hotel-type taxes. Franklin and Williamson County may both have roles in this, and the Tennessee Department of Revenue oversees state tax rules.

Many platforms offer automated tax collection and remittance, but coverage varies. Even when a platform collects certain taxes, you may still need to register locally or keep records for audits. It is essential to verify what your platform covers in Tennessee and Franklin and what remains your responsibility.

What to confirm about taxes

• Which taxes apply to short stays in Franklin and Williamson County, including state sales tax and any city or county occupancy or tourist development taxes.
• Exact tax rates and who administers each tax.
• Whether major platforms collect and remit these taxes for your property type in Franklin, and which taxes they cover.
• Whether you still need to register for local tax accounts or a business license even if a platform remits taxes.
• How often you must file and pay if you remit directly, and how to maintain records for audits.

Build a model to see if it pencils

Once you understand the rules and taxes, you can create a simple underwriting model. Your goal is to estimate revenue, subtract all compliance and operating costs, and see if the net operating income supports your purchase or ownership goals.

Step 1: Revenue assumptions

• Average daily rate, or ADR, based on recent comparable STRs and seasonality.
• Occupancy rate, ideally grounded in local data for Franklin and nearby submarkets.
• Annual nights available, adjusted for owner use if owner-occupied.
• Gross rental revenue = ADR × nights rented.

Tip: Be conservative with ADR and occupancy. Use a sensitivity range to see how small shifts in demand affect returns.

Step 2: Compliance and operating costs

Include every cost that compliance brings so your model reflects reality.

• Platform fees as a percent of booking revenue.
• Cleaning fees and whether they flow through revenue.
• State and local occupancy taxes applied to taxable revenue. Confirm whether cleaning fees are taxable.
• Permit and renewal fees, amortized over the year.
• Business license fees or local gross-receipts taxes if any apply.
• Insurance adjustments for STR use compared with standard homeowner coverage.
• Utilities, lawn care, linens, restocking, repairs, and maintenance.
• Property management or on-call support if you will not self-manage.
• HOA fines or special requirements if applicable.
• Capital reserves for replacements and wear.

Step 3: Net operating income formula

• Net operating income = Gross rental revenue minus platform fees, cleaning costs, occupancy taxes remitted, operating expenses, permit and license fees, insurance adjustments, management fees, and reserves.

Step 4: An illustrative example

This is a simple example to show how the math works. Replace every placeholder with Franklin’s current fees, applicable tax rates, and your property’s true market inputs.

• ADR: 250 dollars
• Occupancy: 50 percent
• Nights rented: about 182.5
• Gross rental revenue: 45,625 dollars
• Platform fees: assume 12 percent, or 5,475 dollars
• Occupancy taxes: apply Franklin and Tennessee rates to taxable revenue after you confirm exact rates and coverage
• Annual permit or registration: include current Franklin fees, amortized
• Management fee: if outsourced, for example 20 percent of revenue
• Utilities, insurance, maintenance, linens, and other operating costs: estimate based on size and usage
• Estimated NOI: gross revenue minus all the above

Use this as a template, not a forecast. Your final pro forma should reflect your property’s location, HOA rules, Franklin’s current STR requirements, and tax remittance specifics.

Three common STR scenarios in Franklin

Different host types face different compliance and financial realities. Here is how to think about three common setups.

Owner-occupied primary residence

If you live on-site and occasionally rent your spare room or entire home, permitting can be simpler than for non-owner properties. Expect to prove primary residence with documentation. You still need to plan for emergency response requirements, quiet hours, guest limits, and taxes on stays under 30 days.

Underwriting tips:

• Model blocked owner days and the seasonal rhythm of bookings.
• Budget for compliance tasks like inspections and posting emergency contacts.
• Confirm platform tax remittance and whether you must register with city and state agencies.

Non-owner-occupied investment property

Some cities restrict or prohibit non-owner STRs in certain zones, apply night caps, or charge higher fees. If permitted, plan for higher insurance, possible inspections, and a local response contact.

Underwriting tips:

• Include all compliance fees and limits. Night caps reduce revenue potential.
• Add full management or on-call support if you cannot respond locally.
• Set aside reserves for enforcement risk if your operations are not dialed in. Compliance must be part of your operating plan.

STR in an HOA, condo, or ADU

HOA and condo rules can be stricter than city rules. If the HOA bans STRs, the investment case does not work unless the rules change. ADUs may have their own definitions and requirements.

Underwriting tips:

• Verify HOA bylaws and condo documents early. A city permit does not override HOA rules.
• Model parking limits, trash handling, and common-area restrictions.
• Confirm how platforms handle tax remittance for multifamily or accessory units.

Risk controls that protect returns

Good neighbor policies and safety investments reduce complaints and limit enforcement risk. Build these into your upfront plan.

• Safety: Install and test smoke and CO detectors, fire extinguishers, and clear egress.
• On-call contact: Provide a local contact who can respond within the required time window.
• House rules: Enforce quiet hours, occupancy limits, parking instructions, and trash days.
• Documentation: Keep permits, renewal reminders, inspection reports, and booking logs.
• Insurance: Confirm the STR endorsement and coverage limits with your insurer.
• HOA alignment: Get written confirmation of rules and any approvals required.

Your 7-step action plan

Use this checklist to move from idea to clear go-or-no-go.

1. Confirm Franklin’s STR rules. Capture the permit type, owner-occupancy rules, stay limits, inspections, fees, and penalties.
2. Check zoning and density. Make sure your address and housing type are eligible.
3. Review HOA or condo rules in writing. If restricted, stop and reassess.
4. Validate taxes. Confirm state and local rates, who remits which taxes, and any registration you must complete.
5. Get insurance aligned. Secure an STR endorsement and understand exclusions.
6. Build a conservative pro forma. Set ADR, occupancy, and all costs. Run best case, base case, and downside case.
7. Prepare operations. Line up cleaning, local response, guest screening, and recordkeeping.

Ready to evaluate a Franklin STR?

If you want to test whether a specific Franklin property can pencil, we can help you pressure-test assumptions and navigate local steps. Our team pairs deep Williamson County market knowledge with a practical, compliance-first approach so you can make a confident decision.

Request a Consultation with the Susan Gregory Group to discuss your goals and the properties you are considering.

FAQs

Are short-term rentals legal in Franklin, Tennessee?

• They can be, but it depends on your property type, zoning, and full compliance with the City of Franklin’s requirements. Confirm eligibility, permits, inspections, and any owner-occupancy rules before you list.

What taxes usually apply to stays under 30 days in Franklin?

• Short stays are typically subject to state sales tax and may also be subject to local occupancy or hotel-type taxes. Verify current rates with the Tennessee Department of Revenue, the City of Franklin, and Williamson County, and confirm whether your platform remits on your behalf.

Do I still need to register if my platform remits taxes?

• Often yes. Platforms may remit some taxes, but hosts are frequently required to register with local agencies and keep records for audits. Confirm your responsibilities with the City of Franklin and state authorities.

How do HOA or condo rules affect an STR in Williamson County?

• HOA and condo bylaws can restrict or prohibit STRs regardless of city rules. Always verify governing documents early. A city permit does not override HOA restrictions.

What ADR and occupancy should I use in my pro forma?

• Use current local benchmarks for Franklin and adjust for seasonality and your property type. Model a conservative base case and a downside case so your plan remains resilient if demand softens.