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Franchising sometimes reminds me of a dysfunctional family. Each of the members is so busy pointing out what the others are doing wrong that they are oblivious to their own failings.
One company is trying to prove that all franchisors do not fall into that category. Choice Hotels International, Inc. (www.hotelchoice.com) has established a Franchise Trust Pact that spells out the company's policies toward franchisees and sets up a code of conduct. It's an interesting document that addresses many of the issues that have been dogging the industry for years. "It is founded on principals of franchisee/franchisor trust and a shared interest in the success of our worldwide system and our seven brands," says Charles A. Ledsinger, Jr., president and chief executive officer. The company runs hotels under the brands Comfort, Quality, Sleep Inn, Clarion, Economy Lodge, Rodeway Inn and MainStay Suites. The Franchise Trust Pact addresses nine issues: 1. Impact. Choice promises not to establish a hotel within 15 miles of the same brand. 2. Nonrenewals and mutual outs: Before turning down a franchisee for renewal, Choice will scrutinize payment history, quality assurance, compliance with brand standards, operations quality, historic performance, positioning and property, appearance and location. Choice will also give franchisees a 12-month notice of nonrenewal; franchisees, in turn, must give a six-month notice of decisions not to renew. 3. Marketing and reservation services funds. Choice pledges to consult franchisees on marketing campaigns and the use of marketing and reservation services fees. 4. Corporate ethics. "Good faith and fair dealing" will guide the transactions of all corporate employees. 5. Liquidated damages. The maximum liquidated damages for terminated hotels is reduced from 60 months of historical royalty fees to 36 months. 6. Supplier options. Choice won't require franchisees to purchase products from specific vendors-as long as they meet "Choice-specified" standards. 7. System standards. Choice will conduct Quality Assurance Reviews to ensure uniform quality throughout the system. 8. Database information. Choice won't use the customer information collected from one brand to cross-sell to other brands within the system. 9. Dispute resolution. In the event that all else fails, franchisees will have the option of settling disputes through a nonbinding mediation program under development. The company has already used other arbitration programs to avoid lawsuits. The program is interesting and shows that Choice is, at least, trying to prevent conflict within the system. Still, the pact reminds me of an exercise that a psychotherapist might give one of those dysfunctional families. You know the ones-pretend like you love each other. Time will tell how sincere Choice really is. Go To Page: 1 2 |
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