28 April 2021
After a year of economic upheaval in the hospitality industry, hotels are making big changes as they look ahead to recovery. Oftentimes these changes involve a complete rebrand, and this leads to questions about what is negotiable in a franchise agreement. In the article below, Bob Braun, senior member of JMBM’s Global Hospitality Group® and Co-Chair of the Firm’s Cybersecurity & Privacy Group, talks about 5 important franchise terms that can usually be negotiated.
Hotel Franchise Lawyer: 5 Things to Negotiate
in your next Franchise Agreement
by Bob Braun
To say that the past year has been a shock to the hospitality industry is a gross understatement. While many believe that a recovery is in sight – even if requires high-powered binoculars to see – most properties are being forced to re-evaluate their status and prospects. Many hotel owners – and brands – are re-evaluating whether a current brand is the right brand. While many hotels did well simply because of the surging economy during the long post-recession boom, the new normal, whatever it may be, requires that hotel owners, operators and brands rethink whether what was right in 2019 is right in 2021 (and will be right for the next ten years).
As a result, many hotels are changing their brands and management. This may be the impact of lenders foreclosing on properties, changes in ownership, and increasingly, the mutual agreement of a brand and a hotel owner that the brand may not be the optimal operator, or the brand may not be the optimal brand for the property.
During this time of change, it’s important to reacquaint ourselves with some of the basics of hotel franchising.
What’s really negotiable in a franchise agreement?
The most common question we hear from clients is, “What’s really negotiable in a franchise agreement?” While brands take the position franchise agreements are not negotiable, our experience with hundreds of hotel franchise agreements is that there knows that there is wiggle room to get some important concessions if you know what to go for and don’t waste your effort where it won’t do any good. CONTINUE READING →