Nine reasons why your hotel property would be wise to terminate your franchise contract

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1 To Many Brands – and they just keep coming up with more of them. They are not new innovations, just catchy names and expensive conversion projects.

 

2. Market over saturated – the tipping point is imminent. Travelers will stop paying attention to the property label. They will only care about the rate and convenience potential.

 

3. Only business travelers can benefit from rewards programs, because their employer pays for the stay, and business traveler gets to claim the reward points.

 

4. Fees always going up – they have to. The saturation mentioned previously makes it increasingly difficult to sell the brand to new customers. To increase revenues, they have to increase the cost of fees.

 

5. Franchisors Area of Protection is a scam - it only relates to a specific brand.....not any of their other sister brands or soft brands – the entire concept of territorial protection is nonsense to begin with. Good experiences for guests sell the product, not the label.

 

6. Termination fees are too high – a savvy property owner should make striking this item from the agreement a requirement to earn their signature. Afterall, the property owner absorbs the majority of conversion costs, not the franchisor.

 

7. Liquidated Damage Fees are too costly –also needs to be struck from an agreement as a condition of the sale. This provision is pure grift.

 

8. Independent hotels can still compete without a franchise – because both independents & Franchise Hotels use OTAs. OTA's do not care if a hotel is a franchise or not. If the operator provides a good guest experience, they probably do not need to rely OTAs as much. OTAs are mostly for lazy owners/managers willing to give up 15% - 30% of their room revenue because they can just sit back and watch their competitors do the exact same thing. (monkey see, monkey must copy) 

 

9. A franchise hotel only receives 7-9% of it's occupancy from the franchisor – an independent  hotel can make up that 7-9% just by lowering their room rate slightly and save money on vendor services and products because they are not locked into the preferred vendors that the franchise mandates they have to use.

 

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