Building and Maintaining First-Rate Relationships Between Franchisors and Franchisees

By Michael Goldstein President & CEO, Packard Hospitality Group | October 28, 2008

Increasing profits, running an efficient hotel operation and maintaining prominence are common goals associated with the hotel industry. Because the ongoing relationship between a hotel franchisor and franchisee often affects each of these aspects of day-to-day hotel operations, that relationship is particularly important to ensuring continual new business, a positive work environment and ultimately, a profitable hotel.

The Concept of Fair Franchising

In today's hotel industry, it is becoming increasingly more common for franchisors to realize that when their franchisees are successful, their profits increase. That is, in essence, the theory of fair franchising: that both franchisor and franchisee must work together to create a product that will be of benefit to them both.

Fair franchising is most often the result of honest, frequent communication between the franchisor and franchisee. The concepts of fair franchising should be employed as early as the negotiation and development stages, and should last throughout the remainder of the relationship.

With fair franchising, a franchisor should always treat the franchisee respectfully and employ and encourage the highest ethical standards in dealing with all of their franchisees. Franchisees, in return, will utilize brand-provided programs and systems to increase business and brand awareness.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.