Questions for 32,500 Hotel Franchisees

Here are questions for 32,500 franchised hotel owners and the answers.

  • What are the differences between a “good” and a “bad” franchise agreement?
  • What can franchisees do to maximize their bargaining power at the beginning and at the time of renewal?
  • Should franchise companies owe a fiduciary duty to their franchisees?
  • What can franchisees do to maximize their protection against same or similar brand competition?
  • What does “good faith and fair dealing” mean in the franchise context and what can franchisees do to pave the way for making good faith and fair dealing a two-way street?
  • What can franchisees do to plan for, and deal with, the potential need to “exit early”?
  • What can franchisees do if they suspect they are paying too much for the products sold to them by franchisor-approved vendors?
  • What is the proper role of franchisee advisory councils (FAC) and how can they be more effective?
  • How can impact studies be made more objective?
  • How can franchisees get their legitimate disputes with their franchisor resolved early in a fair and effective manner?
  • Can a liquidated damage clause be written so as to be fair to both franchisee and franchisor?

Answers

Support the Universal Franchisee Bill of Rights proposed by the Coalition of Franchisee Associations (CFA) this summer (and endorsed by AAHOA).  This latest variation provides twelve guidelines franchisees should look for before signing a 20-year franchise agreement:  freedom of association; good faith and fair dealing; uniform application of brand standards; full disclosure of fees collected by franchisors; fair sourcing of goods and services; right to renew; right to transfer; encroachment; ample notice of significant changes; franchisee termination rights; and default.

Michael Garner, Esq. of W. Michael Garner Law Offices (a franchisee attorney) says:

I think the Bill of Rights is terrific!  It highlights the 12 issues that are truly high priorities for fair treatment of franchisees, and it does so in a succinct and cogent way. Will the Bill of Rights change anything? If it is promoted, endorsed, quoted and used properly, yes, it will change things.  This will require effort within the industry, with courts and judges, with legislators at the state and federal level, and with the public. The document is wonderful—short and easy to understand.  It should be great springboard for educating the public and lawmakers.

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