Mr. Belmonte

Franchising

Finding the Best Franchise Deal Means First Finding the Best Assistance

By Steven Belmonte, CEO, Vimana Franchise Systems LLC

Actually, sometimes it is just a prospective hotel owner, but whatever the case, it is always someone who has found frustration and confusion. The source of their problems is the contracts already entered into (or about to be entered) between them and the hotel franchise company. Whether I am in my office or attending a hotel-industry event, the conversation invariably is about problems that crop up between a hotel franchise company and a hotel owner.

Inference should not be drawn here that the problem in these matters has anything at all to do with devious franchise companies. While all of them are in the business of making money, none would survive for very long if they engaged in practices that are dishonest, unfair or morally bankrupt. So, it is clear that the problem is not that franchise companies are out to cheat potential and current franchisees. Precisely, the problem is that the franchise agreement is an intricate document designed to deal with as many situations as possible in favor of the side that draws up the contract-namely, the franchise company.

Besides, the franchisors and the executives they have hired are in possession of decades of experience, not only in the franchising arena, but also the hotel industry or other areas of hospitality. They have an ingrown advantage in dealings with hotel owners and that is something that will never change for as long as business is done.

The obvious solution is for the hotel owner to come as close as possible to simulating for himself the vast wealth of experience working in the favor of the franchise company. Knowledge must be drawn on wherever it is available, but it must be knowledge gathered with a critical eye and the realization that it is seldom the case that any two hotels' circumstances are exactly alike. Thus, what the potential hotel franchisee learns from a current franchisee must be taken with a grain of salt. No two businesspeople do business in exactly the same way, and no two hotels' properties can be run in an identical manner.

Hotel franchisors are already aware of this truth, and will go to great pains to prepare franchise contracts that are specific to the nature of the property involved. These companies have expertise in information gathering, historical data and travel-and-tourism patterns (to name a few items), and they know how to put all that data to very good use.

All of this is also pertinent to those hotel owners who are already in franchise agreements, and who now seek to be relieved of those agreements. There is an axiom about it being far more difficult to get out of a business contract than it is to enter one, and it seems that in all fairness the opposite should be true. But facts are facts, and whether entering a franchise agreement or seeking exit from one, the hotel owner must be as prepared and informed as is the franchise company.

Historically there has been only two ways of dealing with a franchise agreement, and liquidation or termination. You could endeavor to do it yourself or you could go out and hire a lawyer, who perhaps may be even more uninformed than you might be about the substance of hotel franchise agreements. The problem is that unless you are very knowledgeable about hotel franchise agreements or the varying atmosphere within the different franchise companies, you are probably not going to do an effective job entering or exiting a contract.

One must be particularly careful in cases where you are considering hiring a lawyer to help you put an end to a franchise contract. Lawyers may know the law, but they don't necessarily know the hospitality industry, and it is you who will be paying their fees as they get up to speed via an extended learning process. Look at it this way: You are paying the tuition as your lawyer gets educated about the hotel industry.

And, by the way, using the judicial system in order to mitigate disputes with your franchise company is fraught with peril. Rest assured the other side also has lawyers and probably more resources to pay legal fees that stretch into hundreds of dollars an hour. Because you have chosen to hire a high-priced lawyer, it does not mean that the franchisor will now roll over and play dead.

No two franchise companies are alike, although considering the movement of hotel executives from company to company in our industry, there are doubtless many similarities. Even so, they are all different, and different minds, different attitudes and different philosophies translate into different approaches to the relationship each has with its franchisees.

Even within a franchise company there are franchise salespeople who operate completely different from each other. As much as a franchise company attempts to refine its approach to selling contracts, there are definitely going to be differences from one agreement to another.

In recent years, franchise companies have taken a lot of heat-particularly from the Asian American Hotel Owners Association-about the practices in which they engage as they sell franchises. Some of the criticism has been fair and accurate, while other criticisms have been too general and sweeping.

Many franchise companies have worked hard to rectify practices that may have not seemed problematic on the surface, but in fact were extremely detrimental to the franchisee, and a hindrance to the overall objective of operating a successful lodging property.

Still, even with franchise companies working harder to engage in constant fair-franchising practices, there is still the natural and completely honest tendency for the franchisors to do whatever they can to get the best possible deal for themselves. They, after all, answer not only to the franchisee community, but also to their shareholders and others who hold ownership stakes.

Thus it is up to the franchisee, whether entering or attempting to leave a contract, to see to it that he or she is loaded with the type of knowledge, experience and assistance to create a level playing field with the franchisor.

There are some franchise companies that are more flexible and franchise friendly, and some that are simply arrogant and inflexible, but at the end of the day everyone is willing to negotiate.

The franchisor-franchisee relationship is not necessarily better in every case than it was 10 years ago. I have not personally seen any significant, really measurable progress.

Fair franchise agreements are obtainable if you have a professional negotiating those agreements. There are numerous aspects of a franchise agreement that are negotiable and there are many veteran hotel owners who are not aware of that fact.

In business you don't get what you deserve, you get what you negotiate.

Vimana Franchise Systems LLC is a hotel franchise company owned by CEO Steve Belmonte, President Neal Jackson and Vice President Cory Jackson Jr. In May 2011, Vimana Franchise Systems launched the Centerstone brand as a three-segment franchise designed to create a fair and cost effective model for the hospitality industry. In November 2011, Key West Inns was re-launched under the Vimana Franchise ownership umbrella as a fun and uniquely themed leisure brand. For more information on Vimana Franchise Systems LLC, contact Steve Belmonte at (407) 654-5540 steve@vimanafs.com. Visit Vimana Franchise Systems online at www.VimanaFS.com. Visit Centerstone online at www.centerstonehotels.com, on Twitter at @Centerstonehtls, or on Facebook at www.facebook.com/Centerstonehotels. Visit Key West Inns online at www.staykeywesthotels.com, on Twitter at @StayKeyWest, or on Facebook at http://www.facebook.com/staykeywest. Mr. Belmonte can be contacted at 407-654-5540 or steve@centerstonehotels.com Extended Bio...

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