FRANCHISING IN THE HOTEL INDUSTRY

Franchising in the hotel-industry has become very prevalent in recent years. Because brand recognition has become more important within the industry recently, the benefits of purchasing a franchise, rather than opening a hotel independently, have become more formidable. However, hotel franchising does not come without challenges and risks for franchisees and dealers. Normally, a hotel franchise purchase involves a large company (the franchisor) negotiating with a smaller entity (the franchisee). Accordingly, as would be expected, in negotiating these franchise or dealer agreements, franchisors, manufacturers, and suppliers often have enormous bargaining power relative to its franchisee or dealer. And, sadly, when hotel franchisees or dealers are left with unfair contract terms, they often lack a sufficient legal remedy.

Unlike a service station or automobile franchise, a hotel franchise is not subject to any federal regulations that govern its specific industry. This means that on the federal level, no law specifically protects hotel industry franchisees or dealers from wrongful termination, non-renewal or encroachment by their franchisor, manufacturer or supplier. However, hotel franchises are subject to federal laws that regulate franchises in general. These regulations may require franchisors, manufacturers or suppliers to act in a certain way toward their franchisee or dealer; for example, a franchisor, manufacturer, or supplier must make certain disclosures to a potential franchisee or dealer before selling it a franchise. In addition, many states do regulate franchises generally, but these regulations are disparate and often do not provide sufficient legal protection for franchisees or dealer. While it may be beneficial for hotel owners to gain the brand strength, marketing tools and support of a franchisor, manufacturer or dealer, they may have an inferior legal position when negotiating the terms of the franchise or dealer agreement. This inferiority may make their investment riskier than expected if they do not take proper precautions and seek the legal advice of an experienced franchise lawyer.

Hotel franchisees and dealers face many industry specific challenges. One of the biggest concerns facing hotel franchise owners is territorial encroachment. As a hotel franchisee, you must be cognizant not only of competing hotels that may spring up in your area, but other hotels of the same brand. Another issue, which frequently arises in the franchise relationship in the lodging industry, is that of remodeling and renovation requirements. Hotel franchise or dealer agreements typically permit the franchisor, manufacturer or suppler to require the franchisee or dealer to perform certain improvements to their properties whenever they ask. Basically, many franchise or dealer agreements allow the franchisor, manufacturer or supplier to retain complete discretion as to the timing and extent of improvements to the dealer or franchisee’s property. These improvements may prove excessive, and overwhelmingly expensive. It is extremely important for someone considering a hotel franchise purchase to carefully review such provisions with an experienced franchise attorney before signing on the dotted line. Further, if you are already involved in a hotel franchise relationship you should not assume that if a franchisor, manufacturer or supplier failed to remind you about a remodeling deadline, that you are safe from termination or being forced to make the renovations in the future.

GOLDSTEIN LAW’S SUCCESS IN ADVOCATING FOR HOTEL FRANCHISEES AND DEALERS

Jeff Goldstein and the lawyers at the Goldstein law firm have over thirty years of experience representing only franchisors and dealers in franchise litigation. Attorney Goldstein and his association know the specific pit-falls associated with hotel-industry franchises that dealers and franchisees may subject to. Jeff Goldstein and Goldstein law can help address specific concerns regarding the hotel industry and, armed with their extensive knowledge of franchise law, fiercely advocate for your interests in franchise or dealer agreement negotiations and litigation.

WHAT TO DO IF YOU ARE CONTEMPLATING PURCHASHING A HOTEL FRANCHISE

If you are considering starting a hotel franchise, you have to consider a number of concerns specific to the hotel industry. With an experienced franchise lawyer, like Jeff Goldstein, by your side, you can rest assure your personal and business interests will be represented and protected. With thirty years of franchise law experience, Jeff Goldstein and Goldstein Law can help draft your franchise or dealer agreement and resolve any disputes that may arise.

To effectively safeguard your hotel franchise, you should contact franchising attorney Jeff Goldstein at the Goldstein Law Firm at 202-293-3947. Don’t let your franchisor or supplier strong-arm you into an unfair agreement, or unjustly threaten your existing hotel franchise.

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Goldstein Law Firm, PLLC

1629 K St. NW, Suite 300,
Washington, DC 20006

Phone: 202-293-3947
Fax: 202-315-2514

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