In this post-pandemic world, there has been a resurgence of interest in fair franchising and, more specifically, AAHOA’s 12 Points of Fair Franchising. While many presume this is an issue solely between AAHOA hotel franchisees and their franchisors, it’s really more about working toward a sustainable business model for all stakeholders and for a better guest experience.
For franchisees to provide an extraordinary guest experience, they need to have viable profit margins that allow them to invest in the business to deliver these high-quality experiences. They also need the options and choices to offer such guest experiences at a fair and reasonable price.
Together, we can work toward a more sustainable business model for all stakeholders and for a better guest experience. The 12 Points will help us achieve a stronger future for all.
Several of AAHOA’s 12 Points of Fair Franchising focus on ensuring there are opportunities for a better guest experience, but let us look explicitly at point 5: Vendor Rebates, Exclusivity, and Affiliated Companies as Vendors.
One might ask how mandated and exclusive vendors could impact the guest experience or argue that a true free market should be efficient at keeping competition strong among vendors for their products and services. The free market should drive competitive pricing, along with the highest quality for those goods and services.
When this free market is disrupted, however, not only do we see higher prices, but we might not get the best quality. When franchisors limit the vendors that are providing products and services, competition is frequently limited.
Further, for many franchisees, discounted pricing on products and services has become one of the biggest myths in the franchise industry. Too often, the total number of vendors for a particular product or service is limited, and the competition among the vendors for which ones will be the mandated or exclusive vendors is won not by those that will provide the biggest rebates to the franchisors. This is hardly the free market as we know it.
It should be noted that not all hotel franchisors engage in these unfair practices, but some do, and AAHOA continues to seek input and data from our members on these points so we can address them. For example, do you have specific examples of paying higher costs for the same products and services through a mandated vendor than what you could purchase from the same vendor elsewhere? How do your prices compare between your franchised hotels and independent locations? If you are experiencing these issues, please contact us directly so we can assist you with achieving fairness.
It is a new day at AAHOA. A new start.
In the business of hospitality, we commend your efforts to provide exceptional guest experiences. But you need the assistance and backing of your franchisors. Together, we can work toward a more sustainable business model for all stakeholders and for a better guest experience. The 12 Points will help us achieve a stronger future for all.