Growth of Private Equity Among Franchisors Underscores Need for Fair Franchising


ATLANTA, Ga., Feb. 2 – Laura Lee Blake, President and CEO of the Asian American Hotel Owners Association (AAHOA), released the following statement in response to a New York Times story about the ongoing challenges in the franchise industry and the effect on small businesses, their owners and customers, including the growth of private equity firms acquiring more of the country’s iconic franchise brands.

“As the voice of America’s hotel owners, AAHOA has nearly 20,000 members who own more than 60% of all hotels in the U.S., the vast majority of which are franchisees.  AAHOA is committed to advancing the longstanding, mutually beneficial relationship between franchisors and franchisees that will help grow the hospitality sector. Guided by the 12 Points of Fair Franchising, we stand for sustainable practices that recognize and safeguard the contributions of the small-business owners, including many first- and second-generation immigrants who comprise our membership.

“AAHOA Members are committed to the long-term success of their hotels and motels, and contributing to the economic development in their communities. Our hotel owners know there is strength in numbers, and our industry is stronger when we work together. This is particularly true as private-equity firms, many of which extract as much value from the businesses as they can in five to seven years before getting out, play a larger role in the franchising realm.  AAHOA has advocated to protect our members from such predatory practices, and strives to ensure transparency so that franchisees can advocate for practices that uphold the integrity of the franchise business model.

“We also support legislation to bring fairness to the franchise model, such as Assembly Bill 1958 in New Jersey, which would require transparency on vendor kickbacks, prohibit arbitrary and undisclosed fees, and take other steps to protect franchisees’ investments, especially during a time when our AAHOA Members are still recovering from the pandemic and facing a possible recession in the near future.

“AAHOA further strongly urges the Federal Trade Commission to thoughtfully review the Franchise Rule, including extending the Rule beyond the presale disclosure to ensure that unfair or deceptive acts or practices by franchisors are investigated, and if needed, enforcement action taken. With the significant power imbalance evidenced in franchise agreements, there needs to be additional oversight to protect the true investors in the industry, the franchisees.”


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