These optional services are sold for a fee to the franchisee or owner under management. The role of the franchisor/manager is to recommend these optional services if necessary in response to a hotel problem. It is always the decision of the franchisee/managed owner to agree on optional services. Negotiating a hotel or franchise contract is one of the most important things hotel owners will ever do for their hotel investments. We can help. Christine Ravanat of AccorHotels explains how major hotel groups are expanding their network space through franchise or management agreements, a win-win agreement for groups and hotel owners. The owner`s ability to obtain trademark concessions depends largely on (1) the owner`s leverage (i.e., the owner develops a new hotel or accepts a major renovation; the owner owns several other hotels within the brand`s family); and (2) the owner`s knowledge of the problems. If an owner does not have extensive experience in franchising negotiations, the owner should hire an experienced lawyer and/or hotel advisor to guide the owner through the negotiations. Not surprisingly, franchise agreements contain hundreds of essential terms. Some of the most important terms, however, refer to: very few “legal” terms in the franchise agreement are negotiable, but when discussed when negotiating the terminology sheet before the brand approves the committee, there are several “general conditions” that allow owners to negotiate. Owners will have more bargaining leverage on economic terms if they develop the hotel rather than buying a stabilized asset.

Terms and conditions that could be negotiated: according to the HVS study in 2015, the franchise agreement represented a juicy part of the major hotel chain`s portfolio more than in Europe, as shown in the table below. HVS also indicated that the franchise agreement will continue to increase due to the many reasons why “franchising will likely continue to gain ground as a preferred operating model for a number of reasons: large chains have increasingly focused on franchising to achieve their desired pace of expansion; Third-party suppliers have been competent to bridge the gap between owners and branded businesses; and small, independent hotels in secondary locations are aimed at flexible, less standardized franchisors to remain competitive. These hotels belong to many different types of owners, wealthy individuals, businesses or even institutions that all want to maximize the business of their property. They therefore turn to hotel groups to provide services and support their activities.