Hanuka argues that the extension of the franchise agreement must be the subject of special attention. ”One of the biggest problems I see with renewal, which has been going on for some time, is a typical provision that a franchisor can present a significantly different contract – its franchise agreement ”current” at the time of renewal,” he says. ”And what franchisees don`t understand is that during renewal, they may be legally obligated to sign a completely different contract than before.” The franchisor may also collect different royalties, marketing contributions, termination clauses and more. ”If the franchisee wants to extend, that`s the deal they have to make. So you basically agree with something you don`t know,” he says. It is also important to set a maximum expense if a renovation is needed to bring the brand to different standards. Whether you`re thinking of developing a hotel or buying a hotel to maximize your revenue per available room (and get capital and financing investors), you`ll probably go to one of the hotel`s leading brands to ”house” your hotel with a suitable hotel brand. The document that formalizes your rights and obligations is referred to as the hotel`s ”licensing agreement” or ”franchise agreement.” For many homeowners, their understanding of this important agreement does not go beyond the fundamental economic conditions of royalties, ”protected areas”, duration and possibly ”key money”. It`s not everyone`s favorite topic either. Many franchisees are reluctant to share their best practices in safeguarding a franchise agreement, but when it comes to putting ink on paper, it is essential that they are very involved in the process. In this case, no hotelier wants to manipulate another flag that will open from them in the street, or he will be stuck with increased costs during the extension, but those who do not defend their needs will inevitably be disadvantaged. The franchise agreement is a legal licensing agreement between the hotel brand and the hotel owner, which gives the hotel owner the rights and obligations to operate the hotel under the franchiser`s brand for a fee.
Christine Ravanat is an international specialist with strategic and operational experience in the services and travel sector. With 20 years of experience at AccorHotels, she is now senior VP of the Partner Business Development department. Among his major achievements in BtoB is the creation of a Business to Partners department for owners of better managed and franchised hotels, through digital transformation.