The Rules of Franchising are Changing
By Steven Belmonte CEO, Vimana Franchise Systems LLC | October 28, 2008
Maybe not yet, but I predict soon, the stodgy, old hotel franchises with the "our way or the highway" mentality will be a thing of the past. They will be as useless, and broken-down as the coin-operated vibrating beds that were once popular at hotels and motels across the country.
With the advent of the Internet and advanced technology, hotel membership brands and new, loosely structured franchises are flourishing. Third-party websites, Global Distribution Systems, and strategic alliances allow these new hotel companies to operate at a fraction of the cost of a typical franchise.
First, let me give kudos to one of my closest friends and hospitality colleagues - Mukesh "Mike" Patel. Mike is widely known throughout the industry for introducing the industry's pioneering "12 Points of Fair Franchising" during his chairmanship of the Asian American Hotel Owners Association (AAHOA) in 1998-1999.
In March 2007, Mike and his brother R.C. Patel, both veteran hoteliers, purchased the Budgetel brand from The Blackstone Group to create a new entity: "Budgetel Franchise System." The new upper-economy brand, which will consist mostly of conversions and new construction since there are no Budgetel properties operating in the United States, will become the hospitality industry's first minority-owned hotel franchisor.
Industry sources say that the new franchise organization was purchased to "spark an evolution for fair franchising throughout North America." The goals for this new entity include franchisee participation in brand development plus responsible, controlled growth to ensure long term value.
In a recent press announcement, Mike was quoted as saying: "Our first and most important step is to implement a superior infrastructure that can properly serve the new franchisees we are now actively pursuing . . . We're going to give franchisees a unique opportunity to control their own destiny - by owning their property and also by being partners with us in owning the brand. In other words, now they can really own their present and their future."