Hotel Franchise & License Agreements

March 29, 2013

When should you choose a brand for your hotel? And when should the brand manage your hotel?

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
29 March 2013

Hotel Lawyer on branding your hotel or running it as an independent. When should you brand your hotel and when should you leave it unbranded? How do you know when the benefits justify the costs? And if you decide to brand, should you go with brand management or an independent operator? What are the considerations?

Few decisions are more important. Here is hotel lawyer, Robert Braun to share some insights garnered by our Global Hospitality Group®'s experience in helping clients with more than 1,000 hotel management agreements and franchise agreements.

To Brand or Not To Brand
(your hotel)
by
Robert E. Braun | Hotel Lawyer


Why the hotel branding and management decisions are so important

One of the first decisions in the hotel development or acquisition process can have a lasting impact on the success of the project: whether the property should be branded, and whether that brand should manage the property. The hotel's brand will be a defining part of the profitability, image and value of the hotel, and there may be no other decision which has a greater effect on the future of the property. Similarly, the management of a hotel can enhance the value of the brand, protect the owner, or detract from the value of the hotel -- by as much as a 50% swing.

CONTINUE READING

February 16, 2013

Dual-branded hotels -- What every owner or developer should know

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
16 February 2013


Hotel Lawyer on the Pros and Cons of dual-branded hotels

Dual-branding of hotels in a single structure or complex is quite a trend in the hotel industry and has been picked up by the popular press.

The hotel lawyers in JMBM's Global Hospitality Group® have been working on dual-branded hotels for some time, so we thought we would share some our observations on the pros and cons of this approach.

My partner, Bob Braun, has worked on many hundreds of hotel management agreements and franchise agreements, and has written this article to provide an important update on this subject.

CONTINUE READING

December 30, 2012

Hotel Lawyer on Repositioning: The New York Times reports 39 percent increase in reflagging

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
30 December 2012

Hotel Lawyer on the spike in reflagging hotels. It's often good news for us when the business section of a major newspaper explains what is going on in the hotel sector. (And nice, too, when the paper includes a quote by yours truly.)

The topic? How and why hotel owners reflag properties. The reason for the story: the Great Recession has changed just about everything.

In the New York Times article, Dressing Up for Success, reporter Amy Zipkin says: "According to statistics from Smith Travel Research, a research firm in Henderson, Tenn., nearly 2,500 hotels were reflagged in 2011. While that represents just a 5 percent sliver of all hotel properties in the United States, it was still a 39 percent increase from 2010."

CONTINUE READING

November 9, 2012

The hotel purchase and sale agreement -- What is the value of the seller's representations and warranties to a hotel buyer?

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
9 November 2012

Representations and warranties in the documentation of a hotel purchase and sale agreement (or agreement for purchase and sale of any type of hospitality property): What is the value of the seller's representations and warranties? When does it matter?.

Hotels, restaurants, resorts, vacation ownership projects, spas, golf courses and other similar hospitality properties are different than most real estate. They involve operating businesses that are integrally intertwined with special purpose real estate.

So the documentation to buy or sell such a property (and business) needs to be different than that used for other commercial real estate. One of the areas that is most apparent is in the seller's representation and warranties.

The article below is by hotel and timeshare lawyer David Sudeck, a senior member of JMBM's Global Hospitality Group®, and someone very experienced in the purchase and sale of hotels, restaurants, resorts, vacation ownership projects, spas, golf courses and other similar hospitality properties. In a recent article, David wrote about representations and warranties in a purchase and sale agreement -- what they are, what areas they cover, and what you want to get in a typical deal.

In this article, he writes about the value of these representations and warranties, hurdles to enforcing them and common terms used today.

This article is one of a series of insights that will be published initially as articles on the Hotel Law Blog at www.HotelLawyer.com and then they will be assembled into the HOW TO BUY A HOTEL handbook for our "We wrote the book™" series, much like the HMA Handbook and the Lenders Handbook for Troubled Hotels (see Resource Center at HotelLawyer.com for free copies).

CONTINUE READING

November 4, 2012

Seller representations and warranties in a hotel purchase agreement -- What are the big issues today?

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
4 November 2012

Hotel Lawyer with some tips on buying a hotel or other hospitality property.

Hotels, restaurants, resorts, vacation ownership projects, spas, golf courses and other similar hospitality properties are different than most real estate. They involve operating businesses that are integrally intertwined with special purpose real estate.

So the documentation to buy or sell such a property (and business) needs to be different than that used for other commercial real estate. One of the areas that is most apparent is in the seller's representation and warranties.

The article below is by hotel and timeshare lawyer David Sudeck, a senior member of JMBM's Global Hospitality Group®, and someone very experienced in the purchase and sale of hotels, restaurants, resorts, vacation ownership projects, spas, golf courses and other similar hospitality properties. In this article he talks about representations and warranties -- what they are, what areas they cover, and what you want to get in a typical deal.

This article is one of a series of insights that will be published initially as articles on the Hotel Law Blog at www.HotelLawyer.com and then they will be assembled into the HOW TO BUY A HOTEL handbook for our "We wrote the book™" series, much like the HMA Handbook and the Lenders Handbook for Troubled Hotels (see Resource Center at HotelLawyer.com for free copies).

CONTINUE READING

October 13, 2012

Hotel Franchise Lawyer: 7 areas to negotiate in your next franchise agreement

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
12 October 2012

Last week, my partner, Catherine Holmes, participated on the Franchisee/Franchisee Relations panel at the Lodging Conference in Phoenix. Lodging Hospitality's Ed Watkins moderated the panel and reported on the 7 areas where franchisees can negotiate better terms that Catherine identified as critical to owners . His article is reprinted, with permission, below. A few edits and formatting changes have been made to accommodate the blog format.

What's Negotiable in Hotel Franchise Agreements
by Ed Watkins | Lodging Hospitality

There's Lots of Wiggle Room in Licensing Contracts

This article first appeared in Lodging Hospitality and is reprinted with permission. Copyright 2012 Penton Business Media, Inc.

The franchise agreement is one of the most common documents in the lodging industry, and one of the most important. The agreement, often a source of tension between franchisors and franchisees, is ripe for negotiation in a number of areas. A panel at The Lodging Conference last week in Phoenix discussed what's open for discussion--and what's not--before a licensee signs on the dotted line.

CONTINUE READING

July 19, 2012

Hotel Lawyer: Experts share top 5 tips on picking the right hotel operator and brand for your hotel

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
18 July 2012

There is nothing more important to the value and financial success of your hotel than selecting the right operator, and getting a management agreement with reasonable terms.

At a recent meeting in Los Angeles, my partner and Hotel Lawyer Robert E. Braun of JMBM's Global Hospitality Group® moderated a panel of hotel industry leaders on some of the key issues owners should consider in selecting a new hotel operator.

The panelists included Patrick Bajdek of Carlson Rezidor Hotel Group, Craig Mance, from Hilton Hotels, Rich Musgrove from HotelAVE, Larry Somma of Hyatt Hotels, and Sam Winterbottom from Grubb & Ellis.

Below, Bob gives his top 5 takeaways from the panel. . .

CONTINUE READING

September 12, 2011

Hotel Franchise Lawyer: Hotel Franchise Agreements and the 5 biggest mistakes a hotel owner can make

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
12 September 2011

Hotel Lawyer with some tips on Hotel Franchise Agreements and the 5 biggest mistakes a hotel owner can make

Hotels need brands, and brands need hotels. For many years, hotel brands have been growing in importance for the success of hotels in the United States and abroad. The trend toward branding is quite a phenomenon. According to numbers we have seen, In the early 1990s, approximately 40% of the hotels in the U.S. were branded and the balance were independent. Now the number is probably closer to 80% or more of the hotels are branded or brand-affiliated.

The branding is often accomplished by a franchise or license agreement from a company owning the brand. Other times it is accomplished by a branded hotel management company entering into a management agreement with the owner of the hotel, providing both the brand and management for the property.

Although we have spent a lot of time on Hotel Law Blog discussing hotel management agreements, today we are going to focus on the franchise or license agreement arrangements. With more than 20 years' experience working with more than 1,000 hotel management and franchise agreements, we have some perspectives that may be worth considering.

Hotel owners keep falling into the same traps

One of these perspectives of our hotel lawyers is that many sophisticated hotel investors and owners seem to fall into a handful of traps that would be easy to avoid. And this same handful of traps catches the unwary time and again.

So this article focuses on hotel franchise agreements and outlines the 5 biggest mistakes an owner can make when seeking a hotel franchise arrangement. If this sounds all too familiar, you have probably learned these lessons the hard (and expensive) way. If you haven't stumbled on these yet, you won't want to miss the warning flags and the traps they portend.

CONTINUE READING

September 8, 2011

Tips from hotel franchise and management lawyers: Beware the trap of "changing brand standards"

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
8 September 2011

Hotel Lawyer on changing brand standards.

Hotels need brands, and brands need hotels.

Like all relationships, the relationship between branded hotel operators or franchise companies (the brand) and hotel owners needs ground rules. As long as both parties agree to the rules and follow them, who can complain?

Now, what happens if the ground rules change? In most relationships, both parties would agree to change the rules -- or they would separate and go their own ways.

And what if one of the ground rules is that only one party can change the rules at any time? And the other party would have to follow them, no matter what? This is what can happen to hotel owners that agree, often for very good reasons, that a brand can change its standards for the hotel.

Sometimes the change in brand standards is not so good for the owner... one day you're turning a profit and the next day you're in the hole, paying for expensive changes required by the "new brand standards," with no return on investment in sight.

The management or franchise agreement sets the ground rules and allocates risk between the hotel operator and the hotel owner. Negotiating the agreement, which will include "brand standards", is one of the most important things hotel owners will ever do for their hotel investment.

Here is some advice from my partner, Robert Braun, co-author with me of the HMA Handbook.

CONTINUE READING

August 16, 2011

Hotel Lawyer on the importance of brands -- intellectual property rights and what they mean

by the JMBM Global Hospitality Group®

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
16 August 2011

Hotel Lawyer with what it all means: Family Suites Resorts v. Viacom International d/b/a MTV Networks -- a suit over branding

I was recently interviewed by Jason Freed of HotelNewsNow (a division of Smith Travel Research) about three high profile lawsuits in the hospitality industry.

In the third and final lawsuit we discussed, Family Suites Resorts v. Viacom International d/b/a MTV Networks, we discussed the Family Suites lawsuit. Family suites operates a Nickelodeon-themed hotel, and claims its licensing rights were breached when Viacom entered into an agreement with Marriott to franchise the Nickelodeon brand.

According to the complaint, Family Suites Resorts spent $168 million on its Nickelodeon-themed property -- money it would not have spent if guests could get the Nickelodeon hotel experience elsewhere. So what happened?

An industry built on intellectual property.

As Jason quotes me as saying in the article: "This is an industry that relies on intellectual property--that's what brands are." See, The 5 questions every owner should ask before selecting a hotel brand.

CONTINUE READING