Like all industries, franchisor-franchisee relationships in the hotel industry often lead to disputes. Franchisors often over-promise and under-deliver, and franchisees often find themselves struggling to remain solvent due to factors beyond their control.

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The lodging industry is booming. Even with a slowdown caused by the COVID-19 pandemic, the lodging industry in the United States has experienced an average growth of 7.1 percent per year since 2018. As more people continue to travel both to and within the U.S., the industry appears poised for long-term growth as well.

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Franchisors use a variety of tools and tricks to attract high-quality candidates for franchise ownership. Recently, we have seen a trend toward franchisors offering various types of incentives. While these incentives are typically financial in nature, they take a variety of different forms—and they also come with a variety of caveats and conditions.

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The health and fitness industries are booming. Both industries remained relatively strong through the COVID-19 pandemic (though many fitness brands had to find alternate ways to meet their customers’ needs during mandatory closures), and recent data suggest that both industries are poised for success in 2023 and beyond.

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If you worked your whole life while dreaming of being your own boss, you might be thinking about buying a franchise in retirement. For many people, it is hard to stop completely when they retire, and buying a franchise can seem like the perfect retirement project.

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As a franchisee (or prospective franchisee), purchasing and operating multiple units is one of the keys to increasing your profitability. Most franchises offer a restricted suite of products or services from a single retail location, and their revenue potential is limited as a result. Operating multiple units expands this potential, and, as a result, it is an option that many franchisees (and prospective franchisees) will find themselves considering.

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For franchisees, pursuing franchise arbitration can often be the best (and only) option for resolving contentious disputes with their franchisors. Not only is arbitration generally less costly and time-consuming than litigation, but franchise agreements frequently include “mandatory arbitration” clauses that prevent franchisees from asserting their legal rights in court.

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Arbitration is an alternative dispute resolution (ADR) process that is designed to be neutral while also being less expensive and less time-consuming than litigation. While the arbitration process achieves these goals in most cases, it is important to put the neutrality, cost and duration of arbitration into context. While the arbitration process is facially neutral, franchisors can (and do) take steps to sway the process in their favor. Additionally, while arbitrating a dispute may be less costly and less time-consuming than going to court, franchisees still must often think carefully about whether it is truly worth moving forward.

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As a franchisee, the majority of your legal rights are determined by your franchise agreement. This includes your right to take legal action against your franchisor. Most franchise agreements include dispute resolution clauses, and many of these clauses require franchisees to submit their disputes to franchise arbitration.

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While building a franchise system used to be a long-term endeavor, it is becoming increasingly common for companies to establish franchise systems in order to sell out and move on. We have seen several reports of franchisors selling relatively “young” systems in recent years; and while franchisor founders may say that their decisions are driven by doing what is best for their franchisees, the reality is that selling out offers both a substantial payday and the ability to avoid ongoing risk related to the operation and management of the franchise system.

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