Hotel Franchise Agreements

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In this case, the hotel group (e.g. AccorHotels) is the franchisor, and the owner of the hotel (z.B. an individual) is the franchisee. You sign a franchise agreement for a specific hotel brand (z.B. ibis). In the hospitality and restaurant sector, there are a number of major players and interest groups involved in the management of a successful hotel. Hotel brands, hotel owners and management companies often work together to create transformations and combinations of business models to maximize profitability and increase customer satisfaction. The question to the hotel owner is: “How do you choose between a franchise operator contract or a hotel management contract?” and “Which model is best for your hotel?” The purpose of this article is to provide a brief overview and comparison between the two operating models of the hotel industry. Hotel groups need hotel owners to increase their network footprint and generate fees on the services offered, and on the other hand, hotel owners need hotel groups to choose from prestigious brands and take advantage of powerful distribution and loyalty systems, the latest technology skills and teams of inpatient experts.

This win-win agreement turns into either a franchise agreement or a management contract. The better the topline of the hotel, the better the franchisor`s recipe. These hotels belong to many different types of owners, wealthy individuals, businesses or even institutions that all want to maximize the business of their property. They therefore turn to hotel groups to provide services and support their activities. Although the type of agreement chosen is important for the hotel group, it has no impact on customers. Based on the application of brand standards, they have the same experience, whether they stay in a franchise hotel or a hotel run by the same brand. Overall, the management contract allows the owner to enter the hotel industry, even with limited experience, to make hotels and take advantage of the profits if the company is doing well. But this entails the cost of a higher operating and market risk, while the hotel brand handles all management issues. On the other hand, the franchise agreement gives the owner the right to operate the hotel itself under a brand or flag and to have access to technological skills, sales and marketing systems in exchange for loyalty fees. This is suitable for hoteliers who already have a hotel experience and who want to commit daily to running their own hotel. Whether it`s a young entrepreneur entering into a franchise agreement with a major hotel brand or a multi-unit franchisee, there are a few areas to negotiate. Unfortunately, many start-up franchisees don`t think they have much bargaining power when it comes to signing franchise agreements with established brands, says Ben Hanuka, Principal, Litigation Counsel and arbitrator for Law Works P.C.

in Vaughan, Ont. and a leading practitioner in franchise litigation in Toronto. A contract between a hotel owner and a hotel franchise company in which the franchise allows a hotel to use its services and name for a fee. The services that a franchisor can provide are, for example, national advertising. B, booking system, staff training and other benefits depending on the hotel franchise. A hotel franchise contract usually lasts 20 years, but depending on the hotel and the franchise, the term of the contract can range from 5 years to, in rare cases, 100 years. Not surprisingly, franchise agreements contain hundreds of essential terms. However, some of the most important terms are: an owner`s ability to obtain trademark concessions largely depends on (1) the owner`s leverage (i.e., the owner who develops a new hotel or agrees to make a major renovation; the owner owns several other hotels within the brand family); and (2) the owner`s knowledge of the problems.