Franchise War Brewing at Wyndham?
PARSIPPANY, N.J. — Super 8 hotel owners are up in arms with their franchisor, Wyndham Hotels Group. Hundreds of franchisees have been asking for additional time and flexibility in upgrading an expensive property management system, a sort of hotel point of sales and inventory solution, that they allege not only has major glitches but also will cause considerable financial hardship to its hotel owners.
Wyndham says the upgrade is necessary and more secure.
The Owners 8 Franchisee Association has tried to work with senior management for a year to change their mind. In a December 27 email to Mr. Eric Danzinger, president of Wyndham Hotel Group, the independent franchisee group wrote of their frustration and possible next step. “Many members have come forward urging some form of legal action to stop this forced upgrade,” the email warned. “While we debate the pros and cons of the new systems, several bugs in SoftHotel still needs to be addressed,” the letter continued.
Wyndham has not been pleased with the questioning of their decisions and the impertinence that comes from an independent franchisee association. Likewise, the association is not pleased with the franchisor’s lack of responsiveness. The people spearheading the matter for the 900 hotel owners in such Wyndham brands as Super 8, Microtel and Howard Johnson frustratingly conclude to their members: “Despite our repeated requests, the franchisor is not entertaining the extension of the deadline for the system upgrade.”
The result of the impasse is that nearly 68 percent of the hotel owners who took a recent survey said they are so unhappy with the franchise system that they are not likely to renew their franchise agreements when they expire. But Jeff Johnson, founder and CEO of the Franchise Research Institute, a firm that regularly surveys franchisee satisfaction for chains, cautions that these charts may not be representative of the full network. These are 146 franchisees out of 215 that have anonymously selected to answer that they are unlikely to renew. “It’s hard to understand the real level of franchisee unhappiness unless the survey results are from the whole system, not just the dissatisfaction in the franchisee association," says Johnson.
Wyndham, which encompasses more than 7,000 hotels in 65 countries, may well think that the 146 franchise owners of the association's 900 members are simply a small blip of disgruntled franchisees out of Wyndham’s roughly 1,800 Super 8 franchisees, so why bother dealing with these ingrates?
Wyndham’s traditional franchise advisory board model brings it headaches
Franchisees are also unhappy with the chain’s franchise advisory board, whose members are picked by the franchisor.
Stan Turkel, a hotel consultant, declares the problem with the typical franchise advisory council (FAC), the kind Wyndham and much of the franchise industry use. "FACs are powder puffs that have no real power to negotiate with the franchise company. The evidence for my conclusion resides with the use of the word ‘advisory’ in its title. Franchisors select the majority of the members and the venue for the office, which is usually in the franchisor's own headquarters. The franchisor funds the FAC's budget. It selects the subjects that are permissible for discussion and the subjects that are not permissible — such as terms for franchise termination, liquidated damages, territorial protection, choice of venue, litigation vs. arbitration, etc."
Turkel's description seems to follow the reality of what Owners 8 franchisees have found.
“We met with the franchise advisory board in August. It was a fluff meeting without substance,” describes Jay Patel, Owners 8 Franchisee Association president.
Turkel observes of the situation, “It seems clear to me that the dissatisfaction with the Super 8 franchise arises out of the frustration with the franchise advisory board and with the failure of Super 8 to distribute vendor rebates to their franchisees.”
“Super 8 members don’t trust the FAB because its people are selected by Wyndham," says the Owners 8 president. "Franchisees do not see them as representing their concerns. But even when the FAB makes a recommendation, Wyndham may not act on it." Patel concludes, "The way many franchisees look at it is that the FAB is an illegitimate board.”
Franchisee insiders estimate that the new mandated property management software equals big bucks to the franchisor. “Income to Wyndham for mandating the replacement of our current system for 2100 Super 8 Motels is over $31 million dollars,” says one source. “And this is just for the initial install. There will be another $6 million a year in maintenance fees. Now add the other Wyndham brands to the mix and we are talking about hundreds of millions of dollars of income to a company that lost one billion dollars last year.”
Jeff Johnson stresses that his collected data show a very high demand for franchisors to bring together contrasting groups. “World class leaders of franchise networks are able to unite an array of individuals, particularly those who are alpha-leader entrepreneurial types. It's essential that both sides read off the same playbook and follow the plan because they both buy into it.”
Another criticism of the old franchisee advisory council model is that its members' inhibitions (because of the selection process and anticipated negative consequences from the franchisor for saying the wrong thing) can actually quash innovation for the entire network.
“We don’t see anything innovative in managing and engaging its franchisees,” confirms Patel about the management practices of Wyndham in working with franchisees towards operational excellence.
Playing with fire by ignoring a disagreeable franchisee association?
Communication has broken down to such an extent that in November the franchisor broke off all contact with the independent franchisee association.
The president of the Owners 8 Association states, “They closed off communications with us in November. We asked tough questions that Wyndham did not want to answer. They said to speak just through our attorneys. [Since then] I’ve sent them two letters from our attorney that they have not responded to.”
“No wonder that so many franchisees are unlikely to renew their agreements,” says consultant Turkel, referring to the survey results (see chart). “Wyndham's treatment of its franchisees is destructive of good relationships. It's good to remember that fair franchising is not an oxymoron.”
Christine DaSilva, Wyndham Hotel Group’s director of media relations, responded after contacting a number of company officers, “We listen to our owners and value their opinions. They are able to express their views through their brand's franchise advisory boards, through interactions with the brands' team members and through organizations such as AAHOA [Asian American Hotel Owners Association]. We encourage franchisees to discuss any concerns they may have with us on a one-on-one basis.”
Johnson says that the evidence he’s collected on the creation of high franchisee satisfaction shows that cutting off discussion with a franchisee association can easily lead to system wide resentment.
“This is not what world-class franchise CEOs do,” observes Johnson.
Some industry insiders think that shunning the chain’s own independent franchisee association while engaging the independent Asian American Hotel Owners Association is playing with fire. The problem to the franchisor is that a number of Owners 8 Association leaders and members are also leaders and members of AAHOA, a powerful independent franchisee association that make up 40 percent of America’s hotel owners. AAHOA grades every franchisor on the performance standards of its 12 points of fair franchising. One fundamental stipulation is that franchisors need to work “with the various councils and associations that represent the franchisees.”
AAHOA considers it unacceptable for franchisors to select members of their franchise advisory councils. The 12-point standard directs its franchising members, “Franchisors should encourage and support the establishment of independent and democratic FACs, which are comprised of a representative group of franchisees who are elected by the franchisees themselves.”
Turkel says, “If AAHOA asked their members to sign no franchise agreements with Wyndham for a year, how long do you think it would take for Wyndham to comply fully with AAHOA’s 12 Points of Fair Franchising?”
Adopting democracy to herd cats
Franchisor executives often complain about their job being like “herding cats” in managing entrepreneurial franchise owners. Some franchisors are thriving by incorporating tools of democratic governance rather than an early twentieth century paradigm of corporate committees selected from the top down.
Vantage Hospitality has operated successfully with a different advisory board model.
A notable innovator to not just hotel franchising but all of the franchise industry, Vantage is franchisor to America’s Best Value Inn and the upscale Lexington hotel chain. Where chains have seen an average decline in franchised units in 2009 by 0.8 percent, according to the International Franchise Association, the firm has seen its hotel owners increase by 10 percent. In stark contrast, its system has been riding high during the deepest recession in eight decades. It has grown from 809 America’s Best Value Inns on December 1, 2008 to 890 as of December 1, 2009.
As 2010 starts, it is now the nation’s tenth-largest hotel chain.
Both of Vantage’s brands are overseen by a member-led Advisory Board and Advertising Council, which meets several times throughout the year to discuss and approve expenditures and opportunities. Vantage does not compensate its Board and Council members. These elected members are required to travel, at their own expense, to the annual December conference in Las Vegas and a Spring Board Conference in Coral Springs, FL. They also must be available for phone conferences and any other incidental travel that may occur during the year.
“I don’t want these elected members to feel indebted to me or my staff because Vantage paid for their conference expenses,” says Roger Bloss, CEO of Vantage Hospitality. “I want them to tell me what I need to know — not what I want to hear. And they can only do that by representing the members in their regions without any outside influence.”
Where the corporate world has a top down model of paying employees to work and manage, in contrast, franchises have a bottom up model in which a franchise pays a franchisor in royalties to manage the system. That is similar to a population with largely equal rights paying the government in taxes and then demanding a say in how they are governed. Rather than using grafted corporate models from twentieth century Wall Street, franchising seems to be now reaching back to the tools of government to more effectively manage.
While franchisees allege that Wyndham sells products at their expense as their franchisor receives large kick-backs, Vantage has another model.
“Our Preferred Vendor program is not a profit center for Vantage, as it is for other hotel brands, yet it continues to grow and remain a win-win situation for the vendors and our members,” says Bloss. “We are not out to profit from every vendor and hotel owner with hidden fees and agendas. Our goal is not to have the highest profit margin in the hotel industry. Instead, we continue to reinvest in our people and technology so that we can bring our owners the most comprehensive resources to increase their ROI.”
Consultant Johnson calls world-class franchise executives “authentic leaders” because these franchisor directors are given an implied “authentic” authority on the part of franchisees to orchestrate initiatives from the ground up. “The conductor of a franchise organization must be trusted and understood by the franchisees as the keeper and promoter of their best interests,” he states.
But those are the practices of another hotel chain. In Super 8 and other Wyndham brands, there appears today’s harsh reality for many hotel owners. “They don’t really care what we have to say,” observes the Owners 8 Association president about his franchisor, Wyndham Hotel Group.
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Related Reading:
- Owners 8 Association Presents Issues to Super 8 (software upgrade and problems are discussed)
- Hotel Room Rates Plummet (Super 8 franchisee has issues coping with a hard hitting economy)
- Hotel Chains Going to One-Year Franchise Agreements (A Super 8 franchisee switches franchise systems)
- Vantage Hospitality CEO Says Let Franchisees Elect Advisory Council Members, Grade Franchisor
- Franchise topic:
- Enter Your Own Tag:
I have been waiting for an explanation from the franchisee association about what exactly they feel is onerous and wrong about the new property management system.
None of us have heard anything of substance other than claims that the franchisor will make $X from the new system.
Yes, of course they will. Why would they put in a new system that cost them money?
But, what do the franchisees say that they will lose from this new system? And no, don't talk about simply the cost of implementing it.
Where is the rational explanation about why it would be unfair to the customers to have this new property management system?
In fact, where is any explanation as to why this system should not be employed?
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
You could go to the www.O8A.org website and look at the over 80 issues with problems with Softhotels that are posted. Then as a follow up go to the O8A email updates and look at some of the recent posts regarding further problems sent in by Softhotels users. That should help you understand the issues. Its not just about cost but its about lack of functionality and lack of future focus and direction. Bottom line is franchisees know that this system is just another step towards another one that is more costly. Unfortunately, its a situation where the current hierarchy as WHG has inherited this problem and must complete the process of implementation. They will require a change in the next 3-4 years as per their software agreement that not everyone has signed and is not typcial in the industry. The issue is not as simple as you make it out to be as most franchisees are looking long term and the impact of future upgrades. If you ever worked in any business with a POS or PMS, you know how difficult it is to continually retrain staff and the added costs associated with that. It also creates further frustration from guests who feel that the hotel staff lack knowledge and could lead to bad customer service from GSR's. On another note, if you consider what other franchisors are doing you will find a maximum of 1-2 systems being used and the longevity is 8-15 years. The other franchisors do not abandon software on an annual basis as had been the case with WHG. Just some facts.
listen, these franchisees all signed contracts
if their parent company has broken the contract, these guys would have a legitimate case and would be able to do something about it
the owner's 8 website is laughable
the franchisees are railing against wyndham for things that they have agreed with by putting their names on the contact
the franchisees want to break contract with no repercussions.
come on
if your cell phone contract says they can change rates or plans at any time and you sign up anyway; try getting out of your cell phone contract scott free
real smart oweners8, real smart
Thanks for your opinion. Appears to me that you are probably an attorney and not a franchisee who works in a business for a living. If you notice on the internet there are many cases that franchisees have filed against franchisors not just in the hotel business. Just because a franchise agreement has certain guidelines doesn't mean that they can be abused by the likes of a franchisor. This is after all a two sided business relationship and if the franchisees loose enough revenue then the franchisor will always suffer. Remember it takes 2 to Tango!
Why do you not recognize that your franchisee group is at loggerheads with your franchisor and that the disputes are not being resolved in any rational manner? How long do you wish this process of self destruction to continue without reassessing your approach? Face it. It isn't working out in your favor. Try something else.
If you don't care for my attitude or what passes for style, why don't you call someone who is charming but also effective, like Michael Webster, and get some help from a resource that understands the art of the possible?
Your current leadership is not hitting any homeruns!
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
I have only just began to look at the various "issue" links, but this jumps out and screams bad business: "Statistically, it can be proven that the median income of individuals is in direct correlation with their tendency to send in complaints. In English, the type of clientele that we have in economy motels tend to look for something for free and often result in disingenuine complain"
Frankly, this attitude explains why so many S8 properties are uncooperative and do not value customer satisfaction.
If everyone is so unhappy being part of WR, then tear down your signage once your franchise agreement ends and become generic "Economy Motel". Even Motel6 values its "guests" more than it seems this organization wants to.
the franchisor is justified in inflicting penalties - and the amount has nothing to do with the amount of the room charge.
What you are describing is an inspection/compliance audit program with no checks for equity and fairness - one in which, for example, a Hitlerian field inspector can do things improperly for invalid reasons and the franchisee has no recourse to remediate the process as it applies t him. But things are not always unfair. Sometimes it is the franchisee himself that is to blame.
With an effective franchisee association rather than just a bunch of noisemakers, these things tend to get sorted out. Sorting out dysfunctional relationship processes is one of the main goals/programs of a franchisee association that knows what it is doing.
If it's messed up, work it out. If you can't work it out, look in the mirror. Life is not always someone else's fault.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
To fix something or work something out, it assumes that the franchisor will talk to the franchisee and resolve issues. If you have not noticed, the franchisor is not willing to discuss the tough issues yet.
All hotel operators value all their guests. Unfortunately, the issue that was part of this discussion involves excessive fees and fines charged by a franchisor with no justification. A guest may pay 35-55 dollars and the franchisor fines almost 200 dollars for issues that may sometimes not be valid. While many issues are valid, the fact that the franchisor can randomly charge more in fines than was collected is excessive.
And when you sign up to be a franchise, are you not aware of the guidelines and the penalties? Now, if these were not disclosed, or radically altered, then I can sympathize 110%. If that's the case, then tear down your branded signage and convert to the Super7 or the InBetweenMotel. But if you agree to adhere to certain standards and those standards are not met, then maybe a stiff fine will make proprietors think twice about cutting corners in the future.
Franchisors can change the rules anytime in the name of protecting the brand. There are many that would change their brand affiliations but the franchisor has a thing called liquidated damages that end up costing more than a year or two or even three of franchisee fees payable as a fine.
difficult customer than educated, wealthy people. They think theirs doesn't stink and that we should all feel highly honored to be allowed into their presence. And they want more things "for free" than anyhone else, as well as steal towels, robes, soaps and cosmetics and the contents of the mini bar (blaming it later on the maid). Low income customers tend to have lower expectations, being sensitive to the fact that they - individually - do not represent a big deal for any business.
Second, these lower price motels tend more to be operated by immigrants. Immigrants have more highly developed senses of business acument in dealing with very ordinary people on multiple small transactions. They have better "street" skills than any spoilt American with a degree and a sense of entitlement.
The misfortune is that they believe that, since they are really trying to play the game by the American rules, they ought to be treated with consideration for having done that. When they are treated like third class citizens, they are outraged. Unforttunately, they usually don't appreciate how to go about getting the redress they need. Most of what this group is now doing is extremely counter productive. I am sure that Dady and Garner did not approve the letter being publicized in which there is a lot of heat and a brag that they are represented by D&G. I am reasonably sure that the D&G style is to do the confrontation where the confrontation can result in relief - not on web blog sites and social web sites.
Hopefully, this group will reassess what it is doing and how it is going about it. But the people themselves, individually, are really good busness people.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Unfortunately, it does appear that you have never operated any lodging facility. From experience and as an operator of brands from Motel 6 to Comfort Suites and Holiday Inn, I can truly state that your assessment is not accurate. Middle market and upper market clientele typically does not return to a hotel that treated them unfairly. They are also more forgiving and understanding as they typically may have dealt with similar staffing issues. The lower income crowd expects more due to what they have seen offered by other brands.
business, I have patronized as a customer (many times in each segment) every level of lodging facility that exists, from the Peninsula Hotel to places you wouldn't be brave enough to close your eyes in. Moreover, I have represented lodging business operators, so I have familiarity with the range of issues that are faced. While many issues are the product of franchisor mishandling, just as many are the product of franchisees not competently understanding their rights and obligations. And, of course, like any other grand mal relationship breakdown, there is much blame for everyone involved.
If you seek someone who sees things as you do, you will never solve your problems. It is obvious to me, as someone with significant lawyering experience in your business, that you are not seeing things as clearly as you claim. It is equally obvious to me that on many issues you deserve some consideration - except that your mouth is getting in the way of your obtaining any consideration.
In this economy, no one can predict what the prospects for the business are going to be long term. We do know that in the present tense times are hard. We also know that within two years we will be out of that environment. What that means is that long term decisions taken based upon today's conditions are highly unreliable. At the rate you are proceeding, many, if not most of you will not see the better market that will be enjoyed three years from now. There will be others who take your place because your shortsightedness prevented you from adopting effective survival approaches.
When you run out of whining and recognize how little whining accomplished, maybe you/your successors will look for another approach to dealing with the vicissitudes of being a motel franchisee in a difficult world.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
The imposition of the new S8 Sign is also a big cash cow for the franchisor
There is enough information at the O8A website to indicate that these franchisees have a serious problem that is not going away. The franchisor will continue to screw them and wait them out.
If they can achieve greater membership with adequate funding they can possibly get this sorted and sorted relatively quickly. Investing in an effective association to drive an effective strategy is the only way they will save themselves.
Time and time again franchise networks flitter about and pray and then one day the network has new faces fighting the same issues too stupid to realize history repeats and the cost is everything they were too tight and frightened to protect.
Mr Patel is a lawyer so I expect he should be aware that anything ineffectual isn’t better than nothing. Time; in this instance, is people falling over. They don’t have the luxury of time. Why would they play along with the franchisor strategy that will see them drop one by one?
The BMM community should send one core message in this thread for Wyndham franchisees. Get serious now!
groups divide rather noticeably between the strong and profitable and the marginal. Their interests often diverge, even within the same associaton. So it is often that you have issues that are themselves not well developed in a "ready to do something" sense, as well as issues that sort out one way for the "bigger" franchisees and another way for the others. The luxury of time is one of these strong/weak kinds of factors.
With extensive membership, one either gets focused and prioritized or the luxury of having the smaller franchisees contribute money to the association is reduced with their financial demise/terminations/other manners of disappearance. On the other hand, without some unified direction that is well focused, the stronger franchisees will eventually decide that they can't move as an entire group, and the stronger franchisees will go off and do some arrangements that fit their interests without worrying about the eventual fate of the others.
If you don't take into account the large vs small franchisee in evaluating time luxuries, and also don't generally prioritize issues, the franchisor gets to just sit tight and chuckle about his adversary never getting off due to inteptitude and disorganization.
These aren't stupid people, but when it comes to confronting a large franchisor, they are out of their depth and need leadership that is different than what they are now following. I recognize that is unlikely to be me, but I wish it were me for reasons way beyond the fees it would generate.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
You say that 50% of the Super 8 owners are members of the independent franchisee association.
Unfortunately, the number of members is likely to dwindle. Most franchisees are usually so busy working their businesses that independent franchisee assocations inevitably suffer from dwindling membership, funds and active supporters. Furthermore, franchisees often lack the information needed to convince other franchisees to support an independent group.
What you need is a dedicated group of articulate franchisees to speak personally with others in order to increase, or even just to maintain, your numbers.
Perry Shoom, FranchiseFacts
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I Have been having trouble with bills etc. I spoke to Wyndham. Asking if they can help in redcing my franchise fee. The answer I got was NO we feel we are worth it. They asked me to talk to the bank and get my term changed. I asked why the bank should do anything, as they gave me $2.4M, I put in $1M of my own money in, and what is there investment? For which, in the last 2 years you have got $200,000. from me. There was a long pause.
O8A began just over 2 years ago and has grown to over 1300 members from all wyndham brands. Predominantly made up of the 900 Super 8 franchisees, we are all suffering from the mis-steps of our franchisors. We are suffering from increased financial pressures being placed on us by our franchisor which may result in financial default of many franchisees. This is similar to the latest Burger King issue where corporate is mandating items that are financially distressing on the franchisees. They bought Microtel recently and those owners are just as unhappy with the direction of whg.
franchisee community. That fact alone ought to inform the other franchisees that it is now safe to join and that they would not by joining be putting themselves out on the tip of the spear so to speak.
Thanks for the link to the software information. That is helpful.
The only other question is whether the difficulties in recruiting the other franchisees for O8A membership may be due in part to their being concerned that something they are doing that they should not be doing might come to light. At a certain point one could become curious that reluctant members may themselves be inviting further franchisor scrutiny out of suspicion that they are laying back to try to hide something. Above 50 % membership ought to be a good reason for everyone but the "bad" franchisees to hurry up and join. Not joining at that point could be painting a bull's eye on your behind.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
It sounds as if the franchisor will be waiting out the franchisee association successfully for some time at least. I suspect they do need more than 50% if they want to avoid tinkering with Wyndham for the next 2 to 4 years. At $148 for membership [insurance] I would suggest they will need far greater numbers if the franchisor has already lost interest.
How intellectually challenged must people be to have to think about membership given the size of their bloody investments?
The issues they raise refer to an awful lot of well known abuses and practices in ‘go to hell’ franchising. I particularly like the requirement to buy hardware from the franchisor. That is one of many of the great indicators that the franchisor focus is on increased revenue streaming and that franchisees who obligingly signed up for such scamming can now ‘go to hell’.
There is a lot that can be achieved by the association but the association should consider getting advice and seriously taking the gloves off. They might even gain greater respect and confidence from the non-member parasites.
I can appreciate that these franchisees want to maintain a healthy relationship with the franchisor but it seems that part is over for the time being. Whenever I hear of franchisors behaving like Wyndham appears to be I always suspect there will be worse to come if franchisees do not effectively protect their investments before it becomes too late.
These practices become a disease and if unchallenged the only things that change over the years are the names on contracts and the faces in reception. O8A might also consider organizing their site to be a little more user friendly.
kidding themselves. Even with 100 % participation, the association lacks resources to do anything anyway. That all by itself can be one very glaring reason why they are not taken seriously. If the association is trying to boost percentage of the franchisee community as members by not charging fees sufficient to be effective, that is a ripoff in itself. There are a couple of avenues of potential effective inquiry that the association could pursue and then develop if the information turns out to be as I suspect it might be, but there is no money to recruit/retain the resources needed to execute projects like that.
If an effective association is more expensive than the franchisees can afford/will support, you are better off not to have an association, and for the losing franchisees to simply liquidate instead of slowly dying out in agonizing years of penury. Of course the story could be untrue. Maybe someone with three million bucks in the business really isn't staying there on earnings of $ 2.50 an hour. There may be money coming out that isn't being disclosed. If not and it really is losing in net terms, it would be a mercy killing for the franchisor to terminate the slowly dieing franchisee..
In any event, $ 148 a year is just a waste of $ 148 a year. That just can't be right.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Which one is a better management decision on price point for membership?
a) Charge $150 per year and have 50 to eventually 80 percent of the 1,800 franchised hotel owners as members. ($150 x 1,440 members = $216,000 in annual association revenue).
b) Charge $1,500 per year and have maybe 8% ($1,500 x 144 members = $216,000 in annual association revenue)
c) Or $300 fee for 25%?
understand what must be done and then to provide whatever is necessary to do it. The object is not to get members in some social club. It is to deal effectively with business problems.
If there is no support at the price needed to accomplish anything, then the answer is that we should all just forget about it and let the chips fall where they may. That means no organized professionally guided approach to anything - which is about what you have now anyway.
The franchisees need to understand that it is they who have the problem with their franchisor. The resources available for hire do not have any problem with their franchisor. If they do not provide the resources, the problems do not get addressed - except by public whining and name calling.
Having $ 225,000 annual dues is not the issue. Having sufficient resources so that the franchisor - who will always know what is in the till - appreciates that a focused problem solving approach targets issues that are redressable if not resolved and that there are resources to fund redress of grievances if the association needs to go there. Serious litigation costs at lease that amount and more every year it goes on. The name of the game is to have the money and be focused and professional enough so that you don't have to waste it on litigation - but be ready to do that if it is necessary. As of now you have neither enough money to litigate, nor focused problem solving techniques with the requisite evaluations being made, and are wasting your resources on ridiculous public rantings. No one is going to take you seriously if that is what you decide to continue doing..
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Attorney Richard Solomon says, "That means no organized professionally guided approach to anything - which is about what you have now anyway."
That's quite a statement from someone who wants the gig. Take it as a given that professionals will disagree on approaches. What information do you have that makes you say that this particular hotel franchisee association currently does not have a professionally guided approach?
They can take that into consideration or not as they may choose. They know where they are and how long it has taken them to get there. If where they are is not satisfactory, they can decide to change direction.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
I was going to make that point but I knew you would. It is the annual fee. $148 worth of insurance on investments of $3M doesn't really cut it. Silly!
Once again it comes down to the franchisees understanding that the franchisor does not have to change behaviours unless there is an incentive or a consequences and given the 'go to hell' they have received so far they should be gearing up to save their butts and that will mean action that instigates legal fees that they ain't quite covering.
The franchisor has to take their willingness and ability to fight seriously and Wyndham doesn't. We will be talking about this in 2 & 4 years and those that sit on the sidelines will not save themselves. These people need to research franchising history to understand their situation isn't new and in the end most with similar franchisor approachs saw the franchisees disappear [eventually] with nothing.
When prospective members go to their web site they should be able to get to the core issue and response page without searching through all of the associated issues and grumbles. Lenders will be quicker to protect a $2M debt quicker than they react to a shaky $100,000 debt and we will hear more on the pressure that applies as more face up to reality.
The good news is that as franchisees fall over they will become very difficult to replace now that the franchisees have gone public. Perhaps Wyndham should research a little history as well.
franchisee association with membership costs set so low that nothing can be afforded except the operation of a web site and fees for the association manager. If this isn't a Purvin operation I can't imagine anyone else stupid enough to be doing it this way.
So the question tonight is : IS BOB PURVIN INVOLVED IN THE SUPER 8 MOTEL FRANCHISEE ASSOCIATION?
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
We are not affiliated with the association that Bob retired from. We are affiliated with the CFA.
What would you suggest should be our course of action at O8A?
frustrated! His deal is to recruit members into the association with ridiculous promises about fairness. But there is never enough money to accomplish anything that is mission critical. There is only enough money in the till for him to generate fees for himself.
If you want to have an association that may have some potential to overcome the damage Purvin's system has caused to your credibility (and his retirement doesn't change anything if you are using his systerm), then you have to consider the following.
CFA is good. But CFA is not focused on what you need. Stay in the CFA, but do what is necessary to save yourselves from oblivion.
Someone has to sort out the extent to which your "issues" are real issues and then to assign priorities to the issues so that you are not being a scatter gun in your approach to relationship management with Wyndham.
You have to decide to provide funding to retain competent association management resources. With your membership, $ 1,000 a year would be required to attract people who know what they are doing. You are losing membership/expecting to lose membership because you are ineffective, not because of the money. If your membership won't provide adequate funding for the work required, then at least stop wasting the pittance you are now throwing away for no results.
Mike Webster and I are starting up a new association management resource that, with proper support from your membership, could bring you into meaningful focus. Call either of us to discuss it.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Is that what you and Mike Webster set up with Steve Ellerhorst?
I'd like to hear more about it. I'd also like to know what you would do differently than the CFA.
It will be significantly different from the CFA and is not intended to supplant the CFA. And the IAFD may be only one of more such projects.
Other than that, stay tuned.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Franchisees need all of the help and info that they can get!
Huh?!? I don't recall reading anything in the article or the comments that states or even insinuates that the O8A is losing membership or expecting membership to be lost. What I have read is that right now, within two short years of its founding, the 08A has recruited half of all Super 8 franchisees. That trajectory has them headed to the moon.
Richard, I love you buddy, but you and a guy called PShoom are postulating that this association is, or will lose membership. I'm just confused how this assumption snuck in.
said that members are threatening to leave. It can't possibly be because the dues are too high. It is because the association does nothing meaningful.
They are still on the ridiculous Purvin system even though they no longer do business with Purvin himself - so I understand from what has been posted. With Purvin, all that ever happened was that Purvin took money to live on and ran a chatting society, accomplishing only what could have been accomplished with no association at all and never anything that was a serious issue for anyone. The Purvin method never worked and it won't work now. Illustratively, under Purvin they got toys - web sites/blog sites onto which they could post things that the franchisor could use against them. Anyone can access their site today. Why would you set people up to whine in public and provide the franchisor with a source of information that could be used to cross examine franchisees about ill thought out statements they made in the heat of frustration on these toy web sites? That too is typical Purvin.
They do not today even know which of their "issues" could be dealt with in a work around, because they have never stopped to prioritize anything. Some of their issues are "real" and some should be made to wait while the real issues are addressed. This is just being ignored in favor of ranting. When they stop ranting and start being serious in addressing their concerns, progress may happen - if there is adequate support. If not, they will still be ranting a year from now - but there will be fewer of them.
Missed opportunities are lost opportunities. They have to find their way to reality mode problem solving instead of ranting.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Members are threatening to leave their franchisor WHG not O8A. They would leave O8A for one reason, they have abandoned their franchisor who has not bothered to listen to their concerns.
Okay, I took a look at the O8A website, and it does sound like they do listen to the concerns of your organization. The one that I liked is that your organization didn't like the idea of unannounced QA inspections and that your organization got them to give your franchisees a few weeks notice as to when the inspections would occur. Personally as someone that travels, that really doesn't make me want to stay at a Super 8 hotel, because I want the owner to always think that someone coming in might be doing a QA inspection.
Another thing I noticed, is that there was an e-mail that you sent to Wyndham management where you take offense to them forwarding an e-mail dated Nov 10, to different third parties. However, looking at your website there is a copy of an e-mail dated Nov 10 to Wyndham management. Is this the same e-mail that you took offense to them forwarding?
As for the software system, it sounds like they want to get everyone on the same system. I don't see a problem with that. I may see a problem if they are marking-up the software too high. But software programs aren't cheap and neither is training for said software. I noticed one of the issues that your organization has with the training is that the hotel would have to provide a hotel room for the trainer. Please tell us how often you have 100% occupancy.
softweare markups. If the association has done some homework on the cost of functionally similar systems, then they could tell us about the price/cost differences, But that information isn't posted. For all we know the issue is just that any system is too expensive for some members, not that someone is ripping them off with it.
It is not that unusual, unfortunately, that franchisors decide that costly upgrades may be a cure for negative traffic numbers. That is a toxic environment, because the money to do what is being called for may be the difference between the property remaining open or closing. In one case I was involved in, I had to jump through hoops to save a Holiday Inn franchise that had become out of compliance (to put it nicely). Fortunately, however, the owner could come up with the money to bring it back to scratch and save it. In many hotel/motel franchises, the lenders get the default notices when termination is imminent, and that is grounds for accelerating the loan repayment - so everything collapses and bankruptcy is the only exit if the franchise can't be saved.
These money issues - especially in this economy - are sometimes live or die issues.
Someone faced with this kind of situation is usually not well served by posting negative comments on association blog sites. Asking for leeway for people who post such comments is usually a lost cause. That is just one example of why I hate association blog sites and consider them to be dangerous toys. People who think they can post and keep their identity secret are just kidding themselves. Another franchisee looking for a favor will divulge any information about anyone else if he thinks it will work. The problem of the Judas franchisee is in every association and had to be worked around.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard,
My suggestion is to stop posting on this topic. You keep inserting your foot in your mouth.
You insist the O8A hasn't done their homework, e.g. software comparisons. Where you get these assumptions is anyone's guess. Just look at the information they've posted on directway, audit adjustments, pricing, transfer speeds, etc. You keep insisting that the O8A site is some sort of blog site. It is nothing of the sort. And on it goes.
Stop. Read first to understand what is written before posting.
A good software package in today's business environment is very important but we don't know what is envolved in this 'offering'. However; when I see that a part of the package involves mandatory hardware supply I typically find it is an indicator that franchisees are being forced to pay through the nose. I'm yet to find one where it isn't a scam.
Smart franchise systems will set minimum specifications for hardware and there are some that have negotiated deals where the franchisee would be a mug to go anywhere else but they are in the minority. Usually when you find one scam the franchisor either has more or will develop them in due course. The franchisee's financial model changes and not to better. Unless of course franchisees come together to protect their investment but that would be silly.
with the points you make jd. However; did you get excited when you read of the inspection and reinspection fees. What a Pandora's Box of opportunities that is. I know you will argue standards as I would in other circumstance but not in this approach. I'm surprised you didn't note anything of even mild concern?
Solomon: "When they stop ranting and start being serious in addressing their concerns, progress may happen - if there is adequate support. If not, they will still be ranting a year from now - but there will be fewer of them."
Those words sound just like Purvin. He didn't like ranting either. You like strong litigation. Purvin likes more harmonious mediation. I guess that is what a trade association represents through the eyes of lawyers.
Out of curiosity, why do you hang out and "rant" in what you call these "toy" online sites?
You lost me on this. I can't find a post from a member saying that O8A members are threatening to leave. Where did you see it?
I also don't see a comment that says Purvin set up the Owners 8 Independent Franchisee Association. Where did you get that?
Purvin's fingerprints are all over this association. They have good membership nujmbers, but can't get the critical issues resolved. They have several critical issues, but it is not clear how critical some of them really are, or which is the most immediately resolvable short of litigation. They can't litigate bercause they aren't certain what to litigate about - and they don't have a litigation support constituency anyway. Frankman, this is vintage Purvin - small dues - accomplish little or nothing - no focus - dangerous blog site toy for the members to post inappropriate statements on - It's like Van Gogh's brush strokes - an unmistakable identifier.
The statements about Asian members being fearful - combined with important things not getting done - is a statement of apprehension about losing members. The substance of what is being said says as much as explicit confessions of failing support.
A good illustration of not knowing what to sue about is the recent bozo suit by the KFC franchisees who don't like the YUM Brands advert campaign being heavily in support of grilled rather then fried. When people can't sort out real issues from the fog of many issues, stupid things happen.
I could be wrong, but probably am not wrong. My diagnosis and suggested changes of direction stand.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Bob Purvin did NOT set up O8A. He made a proposal which WE DID NOT SIGN ONTO. Regarless of this, how does this affect the main issues of this article?
that Purvin had a "thing" for hotel franchisee groups, the identical format of your association with his "product" seemed compelling.
Apparently Frankman is right and I guessed wrong on your being Purvin clients. Anyway, I think you have the picture of how I see your situation.
Frankman - They don't know what to litigate about because among their issues are some that ought to be dealt with by other than litigation and one or two that might be litigation candidates but for the lack of knowing some key facts that would aid in the resolvability of it.
Wherever they did get their association format, it is identical to Purvin's useless format. No association should ever have a blog site toy. The members say things on the site that the franchisor always saves for a "rainy day". Most of what is said on those sites is poorly thought out and comes back later to haunt the posting franchisees if they ever do get into confrontation with the franchisor. Mainly, the reason is that the postings are mostly accusatory and the poster can't account for a knowledge of actual facts that support the accusations. They have some facts and a lot of rumor and later when questioned about it fall apart on cross examination and are shown to be people who are perfectly willing to speak irresponsibly whenever they get excited about something. Why Purvin never saw that problem and gave these people these dangerous toys only shows how inept he is/was at trying to advise associations.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Solomon: "They don't know what to litigate about because among their issues are some that ought to be dealt with by other than litigation and one or two that might be litigation candidates"
Mr. Solomon keeps digging the hole deeper. He is painting with much too broad of brush strokes. What specific issue does the O8A attorney not plan to litigate that he should? Has he contacted you with what his plan is for litigation? And has Mr. Patel told you what the O8A strategy is so that you can criticize it?
Wyndham is chuckling at $148 x 900. I suspect the franchisor would have thought it might have to spend more to drain franchisee funds.
Ray,
I doubt that Wyndham will be chuckling much on Monday morning when their leaders read and discuss this article. (They'll probably deny any such thing.) I guess the question will be whether they want to work this out with the independent franchisee association or fight it. If they ignore or fight, the key problem is that their competitors will have a field day eating their system up. That's what happens when you have bad franchising practices. The market fixes the problem.
Super 8 has put themselves in a corner on this one. If they swallow their pride, they will recognize that the only reasonable way out of this without really bruising themselves is to change -- to work with O8A.
If they do nothing, I predict that Super 8 and other Wyndham brands will start feeling an abnormal shedding in the number of franchised units in a year, maybe two. Their competitors would love nothing more than to grab their market share of franchises during this recession because it will be so hard for Super 8 to make it up.
We can see that membership fees are not much. Any idea on what other O8A revenue streams there are? Or how much O8A can anticipate receiving in legal dues if they decide to launch litigation?
Some lawyers will make a lot of money if the franchisees and franchisor decide to litigate. I suspect that the reason Solomon has sidetracked this discussion thread to speak solely on the association is because he would like to show the group how dumb they are without him, and that they should hire him.
Does anyone really doubt that this group will be able to hire the best and brightest franchisee attorneys? You know -- those whom the franchisor attorneys cringe when they see.
For here at BMM is the first consequence that was never considered. If they be a group of intelligent people they will spend all day urgently working on fair resolution.
In the end it isn't the revenue streams [available at O8A site and a hell an enjoyable read] that are as much of a problem as a mindset that allows for maximized franchisor profit at any cost to the network that they thought could be replaced. Conceding any part of any sample abusive revenue stream does not change the future that an unwavering mindset will bring.
Let us all hope that when Wyndham consider how to best tidy this up they consider the big picture that churned $3M investments will bring if they don't.
I'm not sure what that means.
I wasn't talking about the franchisor's abusive revenue streams. I was simply wondering what revenue streams the franchisee association had beside membership fees.
I don't know that they have considered such possibilities but there would be opportunites that would be especially effective if any O8A funding was once Wyndham's.
Those assumptions are too big of a jump for me. I'm not certain that they cannot litigate or that they don't know what to litigate about. I figured that you were getting your information from outside this article and commentary thread, but based on what was written I don't quite follow how you are able to conclude as you do from the statements given.
I respect the reaction made in the blink of an eye by generals and professionals. Sometimes doctors have to make split-second conclusions to be effective. Their thousands of operations allow them to quickly conclude what the probable problem is. Generals have to sometimes make an immediate assesment, to be able to say to the troops move and MOVE NOW. But I picture the legal craft as trained in reason - to carefully and methodically connect the dots of stated facts. After all, we have enough people here and elsewhere who like to speculate with little to support their assertions.
I also understand that we don't have our timeclock on. It's fun to shoot the breeze and speculate in the online comments and forum areas, while watching a great football game. That's what forum discussion threads are made for.
Huh??? How come "no we aren't" gets heard as "yes, we are"?
addressed before the people who could be helpful can meaningfully comment. Consider the following:
If I am reading the numbers correctly, there is only 15 % representation in the Independent Association. The question this raises - that franchisor management cannot have missed - is why are there not more members if the problems are really that serious? The survey doesn't prove much. Anyone will tend to gripe and complain if he can do so for free and anonymously in a survey. How serious he perceives the problems to be is only reflected in his willingness to write checks and put his name in the membership roster of the association. Why is there not an association membership of over 50 % if one is to expect to get "respect"?
What specifically are the defects in the sponsored/required software? A vague claim of bugginess doesn't inform anyone. The question this raises is that if the software really is critically defective - a few bubbles out of plumb, as we say here in Texas - one would expect system wide aggressive refusal to comply until it was debugged in franchisor owned hotels. Again, the issue relates to the small percentage of the total franchisee population joining the movement. Refusenikism has to be pervasive to be effective. It is, however, possible that many franchisees are laying in the weeds hoping that the brave few will accomplish what is needed so they can participate in the fruits of the harvest. If this is so, that is a tragic miscalculation. There is no free lunch - and the franchisor response claimed is exactly what should be expected if there is not pervasive group participatory support.
Can anyone shed some more light on the situation so that the fairness/unfairness issues can more responsibly be addressed?
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
AS an employee of a Super-8, I find these discussions interesting & even slightly amusing. But specifically, your comment that O8A simply said the new software had bugs is inaccurate. Their site lists 52 issues with it; some quite specific. I'm training now to use the new system, I certainly hope it's only half as bad as they say. We use HSS now, without issues.
Richard,
If Owners 8 is made up of predominantly 900 franchisees from Super 8's 1,800 franchises, my old math teacher would say that roughly 50% of Super 8 owners are members of the independent franchisee association.
That percentage seems pretty darn good to me. But you make a point. Why haven't 100% gotten off the fence and joined to protect their self interests? This isn't the time to not rock the boat. Not unless you don't mind paying higher fees and hidden royalties during dark economic times.
See how militant I turn when it isn't my assets and the advice is free?
O8A is made up of almost 50% of Super 8 franchisees. The remaining of the 1300 members are from other brands. If you wish to learn of the bugs in the software, please visit www.O8A.org and then read the front page and follow up on the issues page under softhotels.
Many in the lodging community and especially asian community are what you call laying in the weeds as they do not have the ability to question the franchisor. Some suffer from a lack of communication skills while others are simply scared to raise their voice.
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