“One lie has the power to tarnish a thousand truths.” – Al David
Large hotel franchisors and their lobbying association, what we’ll refer to as “Big Lodging,” are falsely claiming that a groundbreaking bill in New Jersey known as Assembly Bill 1958 (NJ franchise bill/legislation) will weaken brand standards, restrict loyalty programs, trigger costly litigation, and undermine crucial vendor partnerships.
Specifically, in recent weeks, opponents (Big Lodging) of the NJ franchise legislation have published a September LODGING magazine article and social media postings that contain misconstrued statements and false narratives to prop up their claims that problems exist with the NJ franchise bill.
Their claims could not be further from the truth.
Indeed, hotel franchising business will be strengthened by the reforms in this NJ franchise legislation, as explained in a detailed article on page 12 of this issue.
THE SUSTAINABILITY OF FRANCHISING
The truth is corporate hotel franchisors and their allies are opposed because this legislation would create greater fairness and transparency for the hotel owner franchisees who are running the day-to-day operations.
At a time when the corporate franchisors’ total revenues have been increasing by hundreds of millions of dollars on an annual basis, while many hotel-owner franchisees are struggling with greatly diminished yearly returns, it is time to ask pointed questions about the grossly unfair policies and practices being implemented by the franchisors.
If this trend continues, the sustainability of franchising is at risk in the hotel industry.
THE CHANGING TIDES
Speaking with our AAHOA Members across the country, there is a much greater interest than I have ever before seen in converting their flagged hotels to independent ones.
This is largely because of the ease of using OTAs to supply the guest reservations. However, this change would also provide true freedom from paying greatly marked-up prices on products, only so the vendors can then kick back tens of millions of dollars in undisclosed fees to the franchisors. It would mean freedom from the franchisors selling $1 billion in guest loyalty points to Amex and other banks (as happened during COVID) but leaving franchisees holding the bag because they are not reasonably compensated when guests redeem the loyalty points for a free night stay. This would also mean freedom from arbitrary and undisclosed fees on items that do not improve guest experiences or the value of the brand.
These high concerns of unfairness and lack of transparency are being noticed at the top levels.
As we continue to navigate the intricate tapestry of advocacy, I urge every AAHOA Member to actively engage with our initiatives, lend your perspectives, and join us in making a lasting impact.
This is why the NJ franchise bill continues to move forward – because elected officials are hearing the truth about the adverse franchise practices being forced onto hoteliers. The Federal Trade Commission has been seeking information on how to restructure the Franchise Rule and propose new merger guidelines. A recent North Dakota arbitration ruling was levied against Choice Hotels for breaching its franchise agreement by falsely promising it was obtaining volume discounts on vendor products when it never once asked for such discounts, and by using marketing funds to pay key money for the expansion of the franchise, instead of benefitting the franchisees who paid marketing fees for marketing purposes.
Thus, rather than falsely asserting that there are “problems” with the NJ franchise bill, we call on our opponents, Big Lodging, to come to the table and collaborate on ways to strengthen the franchise system with fair terms and increased disclosures.
MAKING A LASTING IMPACT
As we continue to navigate the intricate tapestry of advocacy, I urge every AAHOA Member to actively engage with our initiatives, lend your perspectives, and join us in making a lasting impact.
Together, we are an unwavering force that drives change and shapes the future of our industry. And truth must guide the way.
