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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.

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.

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 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.

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.

REFORMS TO THE distribution of Small Business Administration loans, a new H2-C visa program and expansion of the Earned Income Tax Credit to benefit hotels were the main topics discussed at AAHOA's recent Fall National Advocacy Conference with legislators in Washington. Days later, AAHOA leadership met with Federal Trade Commission Commissioner Alvaro Bedoya to discuss fair franchising concerns. A day of advocacy AAHOA board members and representatives met with more than 100 agency heads and 40 U.S. senators and representatives in Washington to advocate for these and other causes for the hospitality industry.

TEXAS VOTERS APPROVED Proposition 4, a constitutional amendment reducing property taxes this year. AAHOA and the Texas Hotel & Lodging Association, which collaborated to support the amendment, said Proposition 4 ensures property tax relief for commercial hotel properties. The amendment allocates $12.6 billion in state funds for public education, lessening reliance on local property taxes, according to AAHOA. Moreover, it raises the Texas franchise tax exemption from $1.24 million to $2.47 million, providing businesses with tax relief, and caps appraisal values for commercial properties under $5 million. Proposition 4 was passed with over 83 percent of the vote, emphasizing to legislators the priority of reducing property taxes.