Fair Franchising, AAHOA Conference Issue
Newly Elected Treasurer Talks to Blue MauMau
CHARLOTTE, NC (Blue MauMau) - One of the largest and most influential associations within the hotel industry, the Asian American Hotel Owners Association (AAHOA), finished its conference at the Charlotte Convention Center on Saturday, March 10.
Conference activities give evidence that fair franchising is becoming an increasingly important issue within its leadership. Mr. C.K. Patel, who was elected as treasurer at the Conference, is a well-known proponent of fair franchising, and was overwhelmingly voted in as treasurer, achieving a landslide 67% of the vote.
C.K. is not alone in urging hotel franchisors towards fairer franchising. The new chairman, Danny Patel, Vice-Chair Ash Patel and Secretary Tarun Patel are all favoring that stance. (Note: Over 60% of AAHOA members are surnamed Patel, a popular surname in Gujarat province in India.) According to its bylaws, AAHOA's top leaders succeed each other, with the treasurer entering the leadership succession chain, so that in four years the treasurer will be chairman. This system encourages follow-through, so it's a safe bet that the growing initiative of fair franchising is here to stay.
As a result of AAHOA's initiatives, Accor, one of the nation's largest economy lodging chains with approximately 300 franchised properties, announced that it will modify its UFOC and make other changes as proposed in AAHOA's 12 points of fair franchising.
In regard to the future, Mr. C.K. Patel states, "I need to sit down with the current Chair and see what he wants to achieve, so we can work on the issues together. Talking to him and judging by the speech he gave at the Convention, he is for fair franchising. I'm sure that we will all be working together to achieve that goal this year."
Comments
Thanks for the kind words
Thanks for the kind words Michael. Friends like you are my GURU'S. We always learn from each other to bring fariness in franchising. See you in Dallas. CK Patel
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This may be more complicated than I mean it to be.....
but what changes are ANCOR making in the UFOC that meet the AAHOA's fair franchising that weren't addressed in the AAFD's standards? The reason I ask, is as you know this same hotel chain received the seal of excellence from the AAFD citing their acceptance of the AAFD's Fair Franchising Standards. So in a nutshell, is there something that the AAHOA has addressed in their standards that the AAFD should also consider or are the issues for the hospitality industry alone?
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This may be more complicated than I mean it to be.....
but what changes are ANCOR making in the UFOC that meet the AAHOA's fair franchising that weren't addressed in the AAFD's standards? The reason I ask, is as you know this same hotel chain received the seal of excellence from the AAFD citing their acceptance of the AAFD's Fair Franchising Standards. So in a nutshell, is there something that the AAHOA has addressed in their standards that the AAFD should also consider or are the issues for the hospitality industry alone?
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Interesting
You bring up a valid point - is this a good ol' boy network of approving franchise systems among multiple organizations when in fact they have only met one criteria?
That being said, as AAFD has some rather strict criteria and is on its face quite pro-franchisee friendly, I would suggest that even assuming that both AAFD and AAHOA have relatively the same standards, it is not necessarily a bad thing. It would be more of an issue if neither organization were worth the paper their stock or units are printed on, but I don't think this is the case here.
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AAHOA and AAFD Standards
1. The AAFD's standards are not meant to dictate precise contractual terms; I see them as primarily offering the franchisor a means by which to enter credible commimtments as to their exercise of discretion.
2. AAHOA has identified a number of practices that they don't think are consistent with fair franchising. Many of these practices would arguably violate the comparable AAFD standards. But the fair practices or standards AAHOA wants are industry specific and should fit in as approved commentary to the comparable AAFD standard.
For example, consider AAHOA's position on liquidated damages. They feel that for their industry, the terms of the franchise contract should only provide for 6 months of liquidated damages, and not as a penalty.
The AAFD standard on liquidated damages, 14.1o, reads "
Standard 14.10. LIQUIDATED DAMAGES. Liquidated damage clauses are appropriate in a franchise
agreement, provided that they are not punitive in nature, and that they reflect the parties good faith efforts to
establish their reasonable expectations to be derived from the franchise agreement, and where they balance
the legitimate business interests of the franchisor and the franchisee.
Notice the difference in language and specific requirements of AAHOA compared to the AAFD.
I doubt that the AAFD Standards Committee would have passed the AAHOA language as a standard, even if they agreed with it. The AAFD standards committee has to create fairness standards that apply independently of particular contract language.
But on the other hand, AAHOA and other franchisee association, want specific language or terms in their franchise agreement.
Michael Webster PhD LLB
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AAHOA
I offer my congratulations to C.K Patel. He is a terrific asset to AAHOA.
He is been a moving force in fair franchising in the hotel industry.
Michael Webster PhD LLB
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