Fair Franchising: Disclosure & Accountability

In 1998, the Asian American Hotel Owners Association identified a set of standards called the 12 Points of Fair Franchising by which to judge the actions of franchise companies. Now, nine years later, AAHOA has updated the 12 points and has embarked on a survey of franchisors to assess their compliance with these fair franchising standards. In this Hotel Interactive article, I highlight Point 6.

Point 6: Disclosure and Accountability
There should be greater franchisor disclosure and accountability concerning the expenditure of marketing and reservation fees collected from franchisees. On an annual basis, franchisors should disclose how the marketing and reservation fees are spent, including identifying the specific products and services that are paid for with the fees. A franchisor should not profit directly from the marketing and reservation fees it collects from the franchisees or use such fees to pay for marketing and advertising related to a franchisor’s sale of hotels.