Group items tagged

THE AMERICAN FRANCHISE business model is in trouble, according to a recent survey commissioned by AAHOA. The survey was inspired by a webinar AAHOA co-sponsored to gather public comment on the state of franchising for the Federal Trade Commission. The survey found that only 5 percent of the franchisee respondents are satisfied that their current franchise agreements provide fair terms representing a balanced relationship between themselves and their franchiser. Also, 72.6 percent of respondents would "possibly" or "probably" terminate their current franchised business within the next year if they could do so without penalty. "Franchising is in dire straits unless changes are made," said Laura Lee Blake, AAHOA president and CEO. "Franchising is still a powerful tool for economic mobility for America's small-business owners, including AAHOA Members. But franchising only works when both franchisors and franchisees are committed to its success, which requires transparency, fairness, and sustainable business practices. As this survey shows, there is much room for improvement when it comes to relationships that allow our small-business owners to thrive." Blake recently wrote an editorial supporting AAHOA's 12 Points of Fair Franchising and its promotion of a proposed New Jersey law that would reform that state's franchising regulations in ways similar to the 12 points. Several large hotel companies, including Choice Hotels International and Marriott International, protested AAHOA's recent annual convention in protest to its position on franchise reform The survey was conducted among owners of hotels, restaurants, retail stores and other small businesses that had participated in the FTC webinar. It was co-sponsored by the American Association of Franchisees and Dealers, and the Coalition of Franchisee Associations, conducted the survey after a recent webinar with FTC Chair Lina Khan. The FTC is soliciting comments through June 8 about

AAHOA MEMBERS RECENTLY testified in support of New Jersey Assembly Bill 1958, which would make changes to the New Jersey Franchise Practices Act that could benefit the hospitality industry. The association's support for specific parts of the bill is at the center of a division between AAHOA and two major hotel companies over franchise reform. On March 22, 30 AAHOA members attended a hearing of the New Jersey Assembly Commerce and Economic Development Committee during which the bill was passed out of the committee. Several of the members also testified, according to AAHOA. AAHOA members own 45.4 percent of New Jersey hotels, representing 46,124 rooms, the association said. "As the largest hotel owners association, representing the exclusive interests of America's hotel owners, AAHOA showed up in New Jersey to testify in support of amendments to the legislation to improve the franchise model," said Nishant "Neal" Patel, AAHOA chairman. Last May, a contingent of AAHOA members testified in favor of the bill in front of the New Jersey Assembly Judiciary Committee, particularly the aspects of the bill that match AAHOA's 12 Points of Fair Franchising. Specifically, the franchise reform changes supported by AAHOA include restricting non-competes for longer than six months; prohibiting requiring a relocation or capital investment greater than $25,000 more than once every five years unless hotel franchisers can establish a return on the investment; requiring a franchiser that receives "any rebate, commission, kickback, services, other consideration or anything of value" to fully disclose them to the franchisee and turn them over to the franchisee; putting restrictions on mandatory sourcing of goods or resources; and prohibiting suspending, restricting or preventing access to franchise services.

A NEW JERSEY bill that will reform the franchise business model in that state took another step forward today, moving from the Assembly to the Senate, and supporters, including AAHOA, expect it to become law this year. However, the American Hotel & Lodging Association has come out in opposition to the law, saying it would "undermine the foundation of hotel franchising." New Jersey Assembly Bill A1958 would make changes to the New Jersey Franchise Practices Act. AAHOA has been supporting the bill, saying it mirrors several concerns included in its 12 Points of Fair Franchising. Specifically, it would reform rules for mandated vendors, rebates, loyalty programs and new fees, AAHOA said in a statement. "New Jersey has long been a state with a strong entrepreneurial culture that has been welcoming to immigrants, including many AAHOA members," said AAHOA Chairman Bharat Patel. "The state Assembly recognized that and took a step toward making New Jersey a better place for small businesses with today's vote to advance fair franchising principles. New Jersey can be an example to the nation for supporting franchising practices that allow hotel owners to achieve the American dream." AAHOA supports the preference of certified women-owned, minority-owned and veteran-owned businesses to serve as the mandated and preferred vendors for the franchise business model.

AAHOA RELEASED ITS updated resource guide for member franchisees. The updates reflect the current business landscape and the long-term, mutually beneficial relationship between industry franchisors and franchisees. AAHOA's 12 Points of Fair Franchising is officially titled "An Educational Primer: A Best-Practice Approach to Designing, Developing, and Implementing Best-in-class, Mutually Beneficial Franchise Systems." The importance of franchise relations was highlighted last year when several hotel owners filed lawsuits against InterContinental Hotels Group regarding what they call the company's retaliatory actions against franchisees who complain. "Because of the changing business environment post-COVID-19 and the ever-evolving need to educate our members, it was time for AAHOA to revisit the 12 Points and review them carefully to ensure that they're relevant and reflective of industry changes and evolution," said Vinay Patel, AAHOA chairman. "AAHOA created the 12 Points of Fair Franchising Ad Hoc Committee, which was tasked with recommending revisions to the 12 Points of Fair Franchising. With the help, support, and input of the 12 Points of Fair Franchising Ad Hoc Committee and the AAHOA Board of Directors, we're releasing the updated 12 Points of Fair Franchising," he added.

HOTEL OWNERS NAVIGATING industry changes wrought by the pandemic face no dearth of challenges: the decline in business travel, competition from home rental apps and ongoing labor shortages are just a few. Too often, the people owning the hotels - many of them small business owners - are figuring out how to adapt to the new hospitality landscape with added complications from the hotel brands that should be their partners. While many hotel owners have struggled to maintain their livelihoods since the pandemic began three years ago, some big hotel chain franchisers sold hundreds of millions of dollars' worth of loyalty point value to credit card companies under a system that often fails to adequately reimburse the franchisees. That is the thanks these hardworking franchisees got as they worked hard to keep hotel doors open. It does not have to be this way. Generations of franchise owners have successfully embraced entrepreneurship through the franchising model. Franchising allows budding entrepreneurs to adopt a known brand name and comprehensive business strategies in exchange for a portion of the revenue. This partnership has nurtured our industry: Hotels owned by our members employ 1.1 million Americans and contribute $368 billion to the economy. But the franchising relationship needs to be a two-way street to be truly successful. That is why we must ensure that the franchise industry engages in sustainable practices that recognize and safeguard the contributions of small business owners.

THE PROPOSED FRANCHISE reform legislation in New Jersey that has driven a rift between AAHOA and several large hotel companies has stalled in the state's legislature. AAHOA said it was misinformation that delayed the bill's passage, while the American Hotel & Lodging Association said the bill "would have destroyed the hotel industry's franchise model." It will return Assembly Bill 1958 would make changes to the New Jersey Franchise Practices Act that could benefit the hospitality industry, AAHOA said previously. Specifically, the changes include restricting non-competes for longer than six months; prohibiting requiring a relocation or capital investment greater than $25,000 more than once every five years unless hotel franchisers can establish a return on the investment; requiring a franchiser that receives "any rebate, commission, kickback, services, other consideration or anything of value" to fully disclose them to the franchisee and turn them over to the franchisee; putting restrictions on mandatory sourcing of goods or resources; and prohibiting suspending, restricting or preventing access to franchise services.

Travel & Tours franchise business opportunities for your own business and become a franchisee. Search the Travel & Tours Franchise Business information from the Directory of Franchise Zing India.

THE NEW JERSEY legislature is considering legislation that would strengthen protections for franchise businesses in the state, including hotels. AAHOA recently visited the state's capital to express its support for the bill. Assembly Bill 1958 would make changes to the New Jersey Franchise Practices Act that could benefit the hospitality industry, AAHOA said in a statement. Specifically, the changes include restricting non-competes for longer than six months; prohibiting requiring a relocation or capital investment greater than $25,000 more than once every five years unless hotel franchisers can establish a return on the investment; requiring a franchiser that receives "any rebate, commission, kickback, services, other consideration or anything of value" to fully disclose them to the franchisee and turn them over to the franchisee; putting restrictions on mandatory sourcing of goods or resources; and prohibiting suspending, restricting or preventing access to franchise services. Several AAHOA representatives attended a hearing at the New Jersey State Assembly on May 12 to support the bill. They included AAHOA's Mid Atlantic Regional Director Mahendra "MZ" Patel, Past Chair Bhavesh Patel and Laura Lee Blake, the association's recently appointed president and CEO.

A LETTER APPEARING to be from Marriott International stating that the company was "re-evaluating" its official relationship with AAHOA over the association's new stance on franchise relations is causing some disruption on social media. Marriott and AAHOA have not responded to repeated requests for comment on the letter, but in an email to members AAHOA Chairman Neal Patel said the letter is a draft and the company and association are still in negotiations. The letter specifically cites AAHOA's request that the company reassess its franchising policies in light of AAHOA's recently released "12 Points of Fair Franchising." Also, it mentions AAHOA's support for New Jersey's proposed Assembly Bill 1958 that would make changes to the New Jersey Franchise Practices Act similar to the guidelines laid out in the 12 Points. "Ultimately, Marriott cannot support, either by endorsement and/or financially, any organization that is in direct opposition to our business model and interests," Marriott said in the letter. "We believe quite strongly that the longstanding relationship between Marriott and AAHOA has proven to be mutually beneficial, and we are deeply saddened that AAHOA has chosen to pivot its stance on these key issues in a way that is decidedly anti-franchising and anti-Marriott (especially since, as the AAHOA leadership shared with us in a recent meeting, neither AAHOA's leaders nor its members have any material issues with Marriott's approach to franchising or to our franchisees)."

LINA PATEL IS Red Roof's new director for strategic franchise initiatives. In the new role, Patel will direct the growth of Red Roof among diverse and underrepresented corporate and franchise communities. Patel has been a hotel owner for 23 years, according to the statement. Prior to joining Red Roof, she was the member of one of the industry's largest franchise advisory committees. In 2007, Patel joined the board of LPS of USA, a non-profit religious, cultural, and non-political organization providing support to American immigrants from India's Leuva Patidar region. She will report to Matthew Hostetler, Red Roof's chief development officer, the company said in a statement. "Lina is one of the strongest advocates for growth and diversity in our industry, and we are delighted to have her join our team as director of strategic initiatives," said George Limbert, president of Red Roof. "She brings a unique and multi-faceted background as a franchise owner, industry executive and AAHOA board member to her new role," Limbert added. Patel, who joined the board of AAHOA in 2017, played a role in launching the organization's HerOwnership program in 2022 - to help further foster, promote, and empower women entrepreneurs in hospitality sector. "With six years on the board of AAHOA, Lina has a deep understanding of the challenges everyday hotel owners face, as well as their paths to success, which she has demonstrated by example in her own career," Hostetler said. Hostetler said 35 percent of Red Roof's franchise system is represented by women.

ONE VERSION OF a proposed New Jersey bill that would reshape hotel franchising in the state has passed out of committee in the Assembly but efforts reportedly are under way to amend it to address opponents' concerns. The Senate version of the bill remains in committee. The American Hotel & Lodging Association, a long-time critic of the proposed legislation, called the Assembly Committee on Commerce, Economic Development and Agriculture's passage of the bill a "dangerous step forward." Supporters of the bill, including AAHOA as well as sponsors of the bill, did not respond to requests for comment in time for this article. What's at stake The bills, A3495 in the Assembly and S2336 in the Senate, were introduced at the beginning of the year to replace the original legislation that stalled in the state's legislature last year. It is essentially the same as its prior incarnation. Specifically, the provisions include restricting non-competes that are longer than six months; prohibiting requiring a relocation or capital investment greater than $25,000 more than once every five years unless hotel franchisers can establish a return on the investment; requiring a franchiser that receives "any rebate, commission, kickback, services, other consideration or anything of value" to fully disclose them to the franchisee and turn them over to the franchisee; putting restrictions on mandatory sourcing of goods or resources; and prohibiting suspending, restricting or preventing access to franchise services.

The foundation for Rip Patel's interest in hotel franchise development was laid in his teen years. Patel, appointed in January as G6 Hospitality's vice president for franchise development, shares that story in this month's Leadership Series. When he was almost 16 years old, Patel and his family were developing their first franchise hotel, a Holiday Inn Express. As part of the process, they had to undergo an inspection by the franchise representative. "I just remember being so nervous and all the family being nervous. This was kind of a make it or break it for us," Patel said. "He came in and just went through everything while we're just sweating, and everything worked out. I always remembered and appreciated that particular meeting, and I thought that's something that I definitely want to do in the future." That future is now, and Patel has definite goals for his new position.

SONESTA INTERNATIONAL HOTELS Corp. executed approximately 15 franchise agreements, adding more than 1,900 keys in the first quarter of 2024. These new franchise hotels span Sonesta's brands, including The James, Sonesta ES Suites, Sonesta Essential, Americas Best Value Inn, Red Lion Hotels, Red Lion Inn & Suites, and Sonesta Hotels & Resorts, Sonesta said in a statement. "The 15 signed franchise agreements during the first quarter underscore Sonesta's momentum as we welcome new owners into our growing portfolio and expand our market presence," said Keith Pierce, Sonesta's executive vice president and the president of franchise and development. "With a fast, friendly, and flexible approach and a seamless conversion process for our franchisees, we expect continued growth throughout 2024." These agreements highlight Sonesta's appeal as a conversion option compared to larger competitors, the statement added. The company said hotel owners are attracted to the company's focus on maximizing ROI through property rebranding. It offers owners various options across upper upscale, lifestyle, upscale, midscale, extended-stay and premium economy segments.

MARRIOTT INTERNATIONAL IS withdrawing its support for AAHOA in opposition to the association's 12 Points of Fair Franchising, according to an alert to AAHOA members. Indications of the split began in July, when a letter to this effect was circulated but not confirmed, and AAHOA said its efforts to make the situation right in the meantime have failed. The AAHOA member alert also said Marriott had expressed opposition to AAHOA's support for legislation proposed last year in the New Jersey legislature that would strengthen protections for franchise businesses in the state, including hotels. In its alert, attributed to Neal Patel, chairman of AAHOA, said most hotel franchisers did not take issue with the association's support for the New Jersey legislation nor the 12 Points. "Many of our other hotel brand partners have taken an open-minded and collaborative approach to fair franchising. We appreciate their willingness to work together to ensure better outcomes for AAHOA members, the industry, and hotel customers," Patel said. "However, we wanted to inform you that Marriott International - one of our longtime brand partners - has decided to take a different position."

In our exclusive Leadership Series interview, Pat Pacious, president and CEO of Choice Hotels International, reflects on his organization's relationship with AAHOA, his opposition to the proposed New Jersey State legislation on fair franchising and why Asian hoteliers are still important to the company. In the end, he said, it's about keeping state governments out of a dialogue that should be held between franchisers and their franchisees regarding subjects such as selling loyalty points and revenue from preferred vender programs. Pacious also discussed other key topics in the conflict between AAHOA and several large hotel companies, including Choice as well as Marriott International. Also in the interview, held at Choice's recent 67th Owner & Franchisee Convention in Las Vegas, Pacious discusses topics addressed at the convention, such as Choice's recent acquisition of Radisson Hotels Americas. He also comments on the company's offering to current and future franchisees and the importance of Asian American owners. 'This is not about fair franchising' In February, Choice announced it would "pause its partnership" with AAHOA, according to an alert to AAHOA members. AAHOA said Choice's decision came in response to AAHOA's 12 Points of Fair Franchising and its public support for New Jersey Assembly Bill A1958, which would make changes to the New Jersey Franchise Practices Act. Prior to Choice's action, Marriott had announced it was withdrawing its support for AAHOA for the same reason, and both companies chose not to attend the 2023 AAHOA Conference and Trade Show in Los Angeles in early April. Other companies, including Hilton and IHG Hotels & Resorts, also did not attend.

AAHOA's 12 POINTS of Fair Franchising are meant to serve as a template for hotel franchisers to use in how they relate to association members. One of those franchisers, G6 Hospitality, recently responded and let AAHOA leadership know how they're applying the points. G6, parent company of Motel 6 and Studio 6 economy brands, provided an analysis of all the 12 points in which the company provides additional commentary and clarification around the brand's practices related to its franchisees, according to AAHOA. The association released the 12 Points in April as part of educational offerings. Rob Palleschi, CEO of G6 Hospitality, said his company emphasizes open communication and collaboration with its franchisees. "We value our relationship with AAHOA and are committed to open communication and collaboration to support both our owners and our industry," said Rob Palleschi, CEO of G6 Hospitality.

ANOTHER LARGE HOTEL company, Red Roof, has met with AAHOA leaders to discuss the association's 12 Points of Fair Franchising. Red Roof executives, including President George Limbert, affirmed their commitment to work with AAHOA on maintaining strong relationships with its franchisees. Along with Limbert, Red Roof's representatives included Matthew Hostetler, chief development officer; and Fouad Malouf, senior vice president franchise operations. The company's portfolio includes 680 properties in the U.S., Brazil and Japan. AAHOA released the 12 Points in April as part of educational offerings, and previously executives with G6 Hospitality and BWH Hotel Group, parent company to Best Western Hotels & Resorts, held similar meetings to discus the points. "Red Roof has been a longtime partner of AAHOA, and we appreciate their commitment to open dialogue for the betterment of our hoteliers and the broader hotel industry," said Nishant "Neal" Patel, AAHOA chairman. "We look forward to continuing our productive and mutually beneficial partnership with Red Roof, including conversations about AAHOA's efforts to educate its members and promote fair franchising across our industry."

CHOICE HOTELS INTERNATIONAL has become the second hotel company to withdraw its support for AAHOA over the association's 12 Points of Fair Franchising. Specific reasons for the split remain unclear, but AAHOA said it was due to the association's "united front behind fair franchising principles." Like Marriott International in January, Choice has informed AAHOA it will not participate in the upcoming AAHOA Convention & Trade Show, according to a LinkedIn.com post from Laura Lee Blake, AAHOA's president and CEO, as well as a member alert from Nishant "Neal" Patel, AAHOA chairman. "As a result of AAHOA's united front behind fair franchising principles, and for doing exactly what this organization was created to do, I'm writing to inform you that Choice Hotels International has chosen to pause its partnership with AAHOA, including to not attend the industry's upcoming largest convention and trade show," said both alerts. "AAHOA has enjoyed a successful, long-term relationship with Choice, and we're disappointed to hear that because of AAHOA's support for increased fairness and transparency, and for wanting to engage in dialogue on tough issues, Choice no longer wants to be involved."

WYNDHAM HOTELS & RESORTS recently named Amit Sripathi as chief development officer, taking over from Chip Ohlsson, who exits the company in June. Sripathi, who previously was Wyndham's senior vice president of strategic and corporate development, will head the company's North American franchise sales team. Before his tenure at Wyndham, he served as vice president of finance and capital markets at RLJ Lodging Trust, and as vice president of global investment banking at Deutsche Bank, Wyndham said in a statement. "Amit's deep experience in mergers and acquisitions and capital markets focused on the real estate and hospitality sectors at Deutsche Bank and RLJ Lodging are instrumental as we increase our focus on growing our midscale-and-above portfolio while reinforcing our leading position in the resilient select-service segments," said Geoff Ballotti, Wyndham's president and CEO. "Since joining Wyndham, Amit has demonstrated a strategic approach to growth. He's helped divest our owned and managed segments leading to a pure-play U.S. franchise business and worked with our sales teams across the country and around the world deploying over $250 million in development support for our owners. He hits the ground running, knowing what our franchise sales teams need to continue outperforming expectations."

URBAN PARK HOTELS just launched a new flag brand, Urban Park Motel. It is an economy conversion brand intended specifically for small motel owners. Founded in 2020 by long-time hoteliers Jay Patel and John Parkin, Urban Park Hotels is designed to attract hoteliers away from larger franchises with simplified standards and lower fees using membership over franchising. The new brand, which joins existing brands Urban Park Hotel & Suites and Urban Park Hotel Express, follows that same philosophy. "After collaborating with our team, especially during the height of the Covid-19 pandemic, we noticed that a lot of small motel owners were either closing their properties or trying to 'wait it out' and see what happens," Parkin said. "We also had to readjust our development strategy and wait for the industry to rebound. During this period we created Urban Park Motel, a flag that will reward good motel owners with an opportunity that the large hotel franchise companies have overlooked due to size, location and total expected revenue."