Is Hotel Franchising Important?

Two thoughts have recently come to mind in regards to hotel franchising. The first is a legal development out of California that franchisors should take note.

The California Court of Appeals has once again declined to enforce several one-sided franchise agreement clauses. The agreement in dispute had out-of-state choice of law and arbitration venues specifying Texas, the home state of the franchisor while the franchise was located in California. The California Court of Appeals also found that arbitration clauses may also be challenged under the California Franchise Investment law passed in the early 1970s.

Is Hotel Franchising Important?

The second thought I have is a simple one. If you think that franchising in the hotel industry isn't important, just look at these numbers from Hotels in August 2008:

Companies That Franchise The Most Hotels (as of Jan. 1, 2008)

Company

Hotels Franchised

Total Hotels

Wyndham Hotel Group 6,544 6,544
Choice Hotels International 5,570 5,570
InterContinental Hotels Group 3,392 3,949
Hilton Hotels Corp. 2,463 3,000
Marriott International 1,922 2,999
Accor 1,089 3,871
Carlson Hotels Worldwide 929 969
Vantage Hospitality Group 798 798
Hyatt Hotels & Resorts 417 721
Starwood Hotels & Resorts 408 897

 

Stanley Turkel, MHS, ISHC, is a New York-based hotel consultant specializing in hotel franchising issues, asset management and litigation support services. He is also available for due diligence studies for an acquisition, a third-party audit of a marketing or operational problem, an expert review of a management contract or a franchise agreement, or litigation support. Mr. Turkel is a member of the International Society of Hospitality Consultants and can be reached at 917-628-8549 or email at [email protected]

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Comments

Re: Is Hotel Franchising Important?

Look at the top two brands - Wyndham and Choice. They have just about as many franchised units as all other 8 brands on the list.

Even if these were small sandwich shops, the chain size is huge. But these aren't sandwich shops. They are large investments.