Points of Fair Franchising

Updated in

2024

NEWLY UPDATED!

Point 12: Sale of the Franchise System Hotel Brand(s)

AAHOA recently updated "Point 12" of the 12 Points of Fair Franchising to reflect the current industry landscape. This is in response to the several noted acquisitions and mergers of one or more hotel brands between Franchisors in recent years.

Best practices related to Point 12 now recommend that each Franchise Agreement include a “Change of Control” clause to protect the Franchisees in the event of a purchase, sale, acquisition, or merger of one or more hotel brands between Franchisors.

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TERMINATION RIGHTS AND LIQUIDATED DAMAGES

A best-practice approach to voluntary buyout or involuntary termination, liquidated damages, windows provisions, early termination, and Franchisee termination rights

IMPACT, ENCROACHMENT, AND CROSS-BRAND PROTECTION

How to establish a fair and reasonable formula to protect a Franchisee’s assets

MINIMUM PERFORMANCE AND QUALITY GUARANTEES

Minimum brand performance and quality guarantees from franchisors related to public image and reputation

QUALITY ASSURANCE INSPECTIONS AND GUEST SURVEYS

Ensuring consistent, unbiased, and reasonable standards for quality assurance inspections and accuracy of QA reports

VENDOR EXCLUSIVITY, REBATES, AND AFFILIATED COMPANIES AS VENDORS

Ensure competitive pricing

FULL TRANSPARENCY OF FRANCHISEE-FUNDED PROGRAMS AND FEES

The disclosure and accountability for the expenditure of marketing, loyalty, and reservation fees

MAINTAINING AND BUILDING RELATIONSHIPS

Establishing fruitful, long-term business relationships through recognition of value and effective communication

DISPUTE RESOLUTION

Creating a commitment to establish an independent and fair process for the resolution of disputes related to agreements or relationships

VENUE AND CHOICE-OF-LAW CLAUSES

Any party pursuing claims in a court of law should do so in the county and state in which the subject facility is located

FRANCHISE SALES ETHICS AND PRACTICES, PROPER DISCLOSURES

The mandate of fair and honest selling practices among Franchisor salespersons and agents

TRANSFERABILITY

When it comes to transferability, parties should not delay or act unreasonably

SALE OF THE FRANCHISE SYSTEM HOTEL BRAND(S)

Giving notice of a sale to existing Franchisees and pledging to a smooth transition between existing and new Franchisor owners. Click here to see revisions to Point 12, Updated in 2024.