In the hospitality business, providing exceptional guest experiences is priority No. 1. That is why AAHOA is committed to working toward a more sustainable business model for all stakeholders. Everything we do at AAHOA ultimately can impact the guest experience and the 3.5 million guests who stay in AAHOA Member-owned hotels each night.
At AAHOACON24 in April, AAHOA announced the release of revised Point Number 12, Sale of the Franchise System Hotel Brand(s), in its 12 Points of Fair Franchising. The recent best-practice updates reflect the current industry landscape and are in response to the several noted acquisitions and proposed mergers of one or more hotel brands between franchisors in recent years.
Best practices related to Point 12 now recommend that each franchise agreement include a change of control clause to protect franchisees in the event of a purchase, sale, acquisition, or merger of one or more hotel brands between franchisors. The inclusion of this clause impacts the guest experience by ensuring stability and continuity in service quality and brand standards.
When a hotel faces franchisor ownership changes, there is a risk of disruption in operations. Guests may experience inconsistencies in service quality, amenities, and overall experience. By allowing franchisees to exit their agreements without excessive penalties in the event of a change in control, the clause ensures guests can continue to expect the same level of service and experience to which they are accustomed.
Importantly, franchisees whose hotel brand is acquired by a different franchisor may face uncertainty about their future, which can lead to disruptions in operations, staff morale, and, ultimately, the guest experience. However, a change of control clause would provide franchisees with an option to terminate their agreements within a reasonable timeframe after a change in control event (generally, within 12 months by providing proper notice), minimizing disruptions and ensuring a smoother transition.
This clause will give franchisees the necessary flexibility to assess their options and make decisions that align with their business interests and goals. They can evaluate whether staying with the new franchisor is in the best interests of their community, employees, and loyal guests, or if they would prefer to explore other opportunities without facing exorbitant penalties.
By educating our members about a change of control clause in franchise agreements, AAHOA is not only looking out for the interests of franchisees but also promoting a healthier and more equitable relationship between franchisees and franchisors. When franchisees feel supported and have mechanisms in place to navigate significant changes in ownership or management, it fosters a more positive and collaborative relationship between all parties involved, which can indirectly contribute to an improved guest experience. Indeed, through our collective efforts, we can all exceed guest expectations, create lasting memories, and lead our industry into a future of continued success and innovation. Truly, a win-win for all.
