Things Are Seldom What They Seem, Skim Milk Masquerades as Cream
If you watched only the commercials of the large oil companies, you would think that they are in the “save the planet” business. Similarly, the large hotel franchise companies appear to be in the fair franchising business, but they fail even the modest Asian American Hotel Owners 12 Points of Fair Franchising.
Today’s franchise agreements are still one-sided and unfair and heavily skewed in favor of the franchise company. Despite the minor movement toward fairness during the recent economic crisis, most hotel franchisors still have the arbitrary power to:
- Grant new franchises (same or sister brands) anywhere with no territorial protection for existing franchisees
- Impose higher fees
- Create new physical and design requirements
- Mandate sole source procurement
- Impose exhorbitant liquidated damages in the event of termination
- Control the selection of members (and agenda) of the franchise advisory council
- Sell market data including the names, address and preferences of millions of hotel guests.
- Change rules regarding training, technology upgrades, frequency programs, guests discounts, required franchise services, quality standards
- Require personal guarantees from owners
- Restrict a franchise owner’s freedom to sell his property
What can be done? Franchisees can level the playing field only by forming independent franchise owners associations.
About the 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, Tourism and Sports Management. My new book is available at reduced rates. Vist GreatAmericanHoteliers.com.