Keeping Score: A Revealing Look at Hotel Fair Franchising Compliance

Stanley Turkel
September 9th, 2008

Here is the score card that examines how major hotel brands rank in franchisee-friendly practices, according to AAHOAs 12 Points of Fair Franchising.

Over the past five months I have reported on the relative compliance of five major franchise companies with the updated Asian American Hotel Owners Association (AAHOA) 12 Points of Fair Franchising. The companies reviewed were Accor, Carlson, Choice, LaQuinta and Wyndham. My reports were based on the Performance Appraisal Reports (PAR) prepared by AAHOA and issued on March 27, 2008.

PLEASE NOTE: With the following numerical ratings (which were created by me and not AAHOA), I have tried to quantify the relative compliance of each franchise company with the 12 points. In order for a franchise company to rate perfectly on all 12 points, and to receive 100%, it would have to score 8.3 points on each of the 12 points. I have utilized the following numerical evaluations:

Compliance Level
Points
Full Compliance 8.3
Partial Compliance 5.0
Minimal Compliance 3.0
No Compliance 0

And here are the specific hotels and the specific areas they have been graded
in that franchise owners think important in buying and managing a hotel
franchise.

Accor Carlson Choice LaQuinta Wyndham
1(a) Early Termination
& Liquidated Damages
0
0
3
0
5
(b) Windows Provision
3
0
3
5
5
c) Underperforming Properties
5
0
0
5
3
2. Impact/Encroachment/
Cross Brand Protection
5
5
0
3
5
3. Minimum Performance
& Quality Guarantees
0
0
0
0
3
4. Quality Assurance
Inspections/ Guest Surveys
5
5
5
5
5
5. Vendor Exclusivity
8.3
3
8.3
8.3
8.3
6. Disclosure and Accountability
3
3
8.3
5
0

7. Maintaining Relationships with Franchisees
5
0
8.3
5
3
8. Dispute Resolution
5
5
0
0
3
9. Venue and Choice of Law Clauses
5
0
0
5
5
10. Franchise Sales Ethics and Practices
8.3
5
0
3
5
11. Transferability
5
8.3
5
3
0
12. Sale of the Franchise System
Hotel Brand(s)
0
0
0
0
0
Total
57.6
34.3
40.9
47.3
50.3

According to my rating system, the five franchise companies scored in the following order:

# Franchisor
Points
1 Accor 57.6%
2 Wyndham 50.3%
3 La Quinta 47.3%
4 Choice 40.9%
5 Carlson 34.3%

Conclusion: All of these five franchise companies have a long way to go to reach a satisfactory score on the fair franchising scale. (To repeat: These numerical ratings are mine alone.)

As I have reported in another article, this situation could be quickly improved if hotel owners would sign franchise agreements only with those franchise companies who were in full compliance with AAHOAs 12 Points of Fair Franchising. I will report on those hotel franchise companies next month.

  • If you need help in negotiating your franchise agreement
  • If you have a problem with encroachment and impact
  • If you need an expert witness in a hotel litigation law suit
  • If you need a featured speaker at your company or organization.

Stanley has spoken and written recently on the following subjects:

  • Fair Franchising is Not an Oxymoron
  • Keeping Score: Which Franchises Comply Worst and Best with AAHOAs 12 Points?
  • Franchise Advisory Councils: Powerhouses or Powderpuffs?
  • Great American Hoteliers: Pioneers of the Hotel Industry

Author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services. Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality. Call Stanley at 917-628-8549 or email at stanturkel@aol.com.

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