12 Points of Fair Franchising

Many franchisees ask our franchise law firm what agreement provisions are fair for the franchisee. Some even wonder if any franchise agreement is fair. One way to to assess your franchise agreement, Federal Disclosure Document and other franchise related documentation is to attend or review the reports put out by the AAHOA (Asian Americans Hotel Owner Associatioon). The AAHOA puts out a performance appraisal report (PAR) that compares five leading franchise companies by determining how they measure up to its 12 Points of Fair Franchising. While the organization looks at franchisors in the hotel industry, its report can provide some insight for any franchisee. For example, according to this article, the Wyndham Hotel Group has liquidated damages clauses in its franchise agreements which generally amount to $2,000 per guest room, or 24 months of fees even though the AAHOA states that franchisees should only have to pay six months of royalty fees.

AAHOA Releases 2007 Report on Franchisor-Franchisee Relationships and Fair Franchising

The Asian American Hotel Owners Association (AAHOA) is one of the fastest-growing organizations in the hospitality industry with 8,700 members owning more than 22,000 hotels, many of which are franchised. The Association puts out a progress report that evaluates franchise companies against AAHOA's 12 Points of Fair Franchising. According to this article, the association released its 2007 report today on Fair Franchising "that offers insight into franchisor-franchisee relationships and provides a tool for holding franchise companies more accountable for their practices and agreements." Mukesh Mowji, 2006 AAHOA Chairman and visionary behind the process, said "this is a first step in a journey toward 12 Point compliance. It is imperative that AAHOA and franchise companies continue progressive dialogue to improve agreements."

Extended Stay Hotel Chain is Awarded Exclusive Franchisee Satisfaction Award

The Franchise Business Review is a national franchise market research firm which conducts a survey each year of franchises and franchisee satisfaction to help prospective franchisees evaluate a franchise system. Several key areas of hundreds of franchises are surveyed by thousands of franchisees including training and support; operations; the franchisor/franchisee relationship; and financial opportunity. According to this article, "Value Place is the only hotel chain to earn a spot on the coveted FBR 50™ list, recognized as the most exclusive award in franchising." Eric Stites is the founder and president of Franchise Business Review. According to Stites, "For people considering a franchise investment, satisfaction among current franchisees is one of the most critical factors to consider. Our goal is to help simplify the franchise research and buying process and help entrepreneurs discover the best franchise opportunities in today's marketplace."

Franchisors Feel Just Fine About the Future of Franchising

At the Hunter Hotel Investment Conference last week in Atlanta, many franchisors in the hospitality industry expressed optimism regarding continued growth. According to this article, one franchisor, Doug Collins who is President & CEO of America's Best Franchising stated that he "sees franchising in the mid market arena as a consistent business, with little variation due to any economic factors so far. Things are about the same in limited service. We are kind of steady like the turtle. We see steady growth every year. " Collins added that "(I)n 2007 the company opened 45 Country Hearth Inns & Suites and America's Best Inns & Suites properties." Collins believes that the company will open 50 franchised hotels this year.