The Franchise Owner's most trusted news source


Log In / Register | Apr 20, 2018

Comments regarding this article:

Add new comment


17 Comments

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Roger Bloss's Webcast

What a refreshing and innovative approach to franchising. I wish I was not locked-in to my long-term franchise contract and could afford to terminate to join this brand. I felt Roger really spoke from his heart and you can tell he truly does enjoy what he does everyday....very passionate.

Ray Borradale's picture

Show the love

I’m beginning to wonder if there isn’t a lesson here for franchisees of other brands and not just franchisors.

Is it not possible that franchisees have contributed to estranged franchising relationships by seemingly always resenting paying royalties for training and support that never comes?  And advertising fees that appear to almost totally find their way to expense categories that can deftly be aligned to advertising.

Think about it! Is it so bad when a POS system freezes? Don’t you somehow manage to get by? And franchisees always give the impression they take exception to the cost of a remodel akin to when their wives want a new kitchen or hubby buys a trench digger for his little garden patch.  

The quest for operational excellence and systems creating efficiency for all – are we really doing our share? Isn’t it possible that those confrontational almost bullying visits by people employed by the franchisor to simply do a job are perceived that way because franchisees contribute when they don’t react well?

Perhaps if franchisees treated the franchisor and his staff a little better everything could be really, really nice.

Ah that’s right; I forgot about profitability v impending bankruptcy …..  &^*% em!!

Promised ROI where the universal franchising promise actually means something and isn’t forgotten the minute after the contract is signed. Who would have thought? Who would have thought that everyone could share the same financial bed and it wasn’t in some seedy motel room in Houston on an hourly rate with a giant threat just around the corner overseeing its take.

My greatest fear for Vantage Hospitality is that Roger Bliss is a stoner. A word of advice to Vantage Hospitality franchisees; consolidate supply chain.

But whatever it is that keeps Roger so happy apart from the peace and profitability he enjoys, perhaps you could share your contacts with the rest of franchising.

michael webster's picture

Fairness and Operational Expertise

Guest writes: "What's interesting about Vantage Hospitality is that the twelve points of fair franchising that is ingrained in this company's DNA is creating a better operating chain, one that is eating the budget hotel sector's lunch."

Uh, I am a huge proponent of fair franchising because I want surplus gains/losses to be fair and understood in advance.

But fairness has nothing to do with operational excellence, and you often get the latter without the former.  There is nothing in AAHOA's 12 Points or the AAFD Fair Franchise Standards that even remotely guarantees operational excellence.  Nothing.

michael webster's picture

Programs

Juan writes: "Until the day that money showers down on me, I'll have to settle for something more humble: a budget hotel next to the highway with both a good operation and a fair franchise arrangement."

Juan, if the Econolodge bunch wanted the equivalent operations of Marriott it is dead simple - clone Avendra.  Any reasonably large group could achieve the same operational excellence that Marriott has by simply voluntarily engaging in supplier programs.  Enough hotels will attract enough suppliers, which will attract more hotels .... you get the picture.

I am pretty sure that there are a number of 1st rate heads of purchasing out on the market that would jump at chance to run the supplier program.

I wish someone would send

I wish someone would send this as a case study to YUM Brands. David Novack and his team are so disconnected its not even funny and the franchisees of all the brands are suffering. I know this is Hotel issue but I believe it would work in the food service sector also.

Juan F's picture

Dreaming of a Ritz

Your comment has my greed aching to be exercised. I'm with the AAHOA members. If I could qualify for a $100 million Marriott, I could make a huge amount of money at one pop when I resold the property. It takes a lot of Econolodges that are worth half a million to equal what I could make if only the banks would qualify me for a single supreme investment.

Property values will be turning around soon.

A Ritz would be good too. If the timing is right, one Ritz-Carlton in Southern California is all I need to put me in Fat City, even with a tougher franchise agreement that I have to endure. Alas, I can't even get money at the moment for an Econolodge that my family would run. Still, Iike the AAHOA members, I'm dreaming of a Ritz.

Until the day that money showers down on me, I'll have to settle for something more humble: a budget hotel next to the highway with both a good operation and a fair franchise arrangement.

Liquidated damage

How much was the six months extra of fees worth?

Out of curiosity, have any franchisor members at least kept liquidated damages to the organization's fair franchising standard of 12 full calendar months without an exception or is this goal still a ways off from being achieved? Please name names.

Re: Role of Franchisor and Franchisee

People might also want to read Reinventing Talent Management to get a better view of this relationship.

Positive ROI

The ROI promise sounds very exciting. Does anyone know of any other franchise system that offers a promise of a positive ROI or your money back?

Twelve points driving operational excellence

What's interesting about Vantage Hospitality is that the twelve points of fair franchising that is ingrained in this company's DNA is creating a better operating chain, one that is eating the budget hotel sector's lunch. The high growth numbers of existing hotel owners that convert, show that owners in that sector are jumping to ABVI.

My bet is that the new Lexington Suites brand will operationally be very inviting for the mid-range sector.

RichardSolomon's picture

Fair Contracts are meaningless and dangerous. Franchise

agreements are designed for worst case scenarios. Every franchisor with good sense wants to be able to deal with the rogue franchisee in summary fashion. The justification for it is protection of the system against franchisee behavior that could really hurt the brand and intrude upon the franchisor's ownership rights.

These agreement "platforms" if you will are necessary, proper and should never be changed to facilitate franchisees being able to "get away" with improper conduct.

The problem in franchising is not the contrnact. It is in civilized relationship mnaagement. When relationship management is conducted in a manner that is not predatory, no one has to ever look at the contract. Everyone makes money and behaves rationally. The exception can be dealt with.

If we could get the pigs out of franchising - on both sides of the relationship - identify them - call them out publicly and loudly - shun them - aggressively disclose what they do and how they do it - that would impair their ability to get away with predation.

That calls for some guts on the part of frnachisee groups, because calling out the pig franchisor makes it tough to sell your business and leave a bad system. That conflict - fear of not being able to stick some other poor sucker with your bad business deal - prevents publiicity from doing its proper job in a predatory franchise. As of now we are getting some "calling out" - here on BMM and on some "This franchise sucks" blog spot, but it is not organized for the most part. When franchisees want to sell their bad businesses, they do all the bad stuff that crooked franchisors do.

Human nature is really wonderful, isn't it.

michael webster's picture

What is More Surprising

What is more surprising, Stan, is that many of the AAHOA members would jump at a chance to get a Marriott.  Yes, the contract is not fair, but Marriott enforces its program standards.  Best Western could have an agreement which passed AAHOA's 12 Points of Fair Franchising, but without enforcement of program standards it would not be attractive.

Fair contracts are important, but they don't trump operational excellence.

12 points- ABVI

Out of curiousity, I looked up a lawsuit on PACER.  As part of the lawsuit, ABVI is asking for accelerated Monthly fees for what looks to be 12 months (termination letter dated June 2010, but asking for fees thru June 2011).

However, the AAOHA's Points of Fair Franchising states:

'In the interest of fair franchising, a franchisee should only have to pay six months of royalty fees.  Specifically, the Franchisee should be required to pay as LDs, and not as a penalty, the product of the average monthly Royalty Fees paid by the Franchisee during the prior 12 full calendar months (or the shorter time that the Facility has been in the system), multiplied by six (6) months. '

So, is this a case of old agreement?  If so, if it's so important, why not retroactively apply a 6 month LD? 

I'm trying to figure out if these fair franchising points are good on the surface, but not used in actual cases (ala the Cuppy's debacle with the AAFD).

Stanley Turkel's picture

franchisees run brand, beat competition

Americas Best Value Inns (ABVI) is the fastest growing hotel franchisor for good reason: it complies 100% with the Asian American Hotel Owners Association 12 Points of Fair Franchising. Since 10,000 AAHOA members own 20,000 hotels (40% of all the hotels in the United States), their choice of ABVI's flag is not surprising. What is surprising is that none of the major hotel franchisors (Marriott, Hilton, InterContinental, Starwood, Wyndham, Choice, Accor, LaQuinta, Hyatt) get even a passing grade in compliance with the modest requirements of the 12 Points of Fair Franchising. Congratulations to Roger Bloss of ABVI. Keep up the great work on behalf of hotel franchisees. Stan Turkel

Ray Borradale's picture

Franchisees sell franchises or they don't

Surely here we are seeing franchisees and franchisor working together to optimize franchise value and enhance the brand. There is a lot of recommendation when 75% of leads are coming from franchisee referrals in an industry where franchisee investments range in the $millions and where franchisee renewal sits at 98%.

Some might argue that his formula isn’t adaptable to their industry or their current model is too far whacked to adapt to this or something with similar intent but perhaps they should consider this network’s growth and the benefits that come from operating in peace. 

This model rationalizes franchisor operating costs and that seems to flows through to the franchisee any everyone’s ROI. I imagine it would send PE interest far, far away so I really like it a lot. I see one problem; how the hell do you get to argue with a franchisor who only takes 1 vote?

michael webster's picture

The Role of Franchisor and Franchisee

Franchisors and franchisees occupy different places in the supply chain.  Each has different responsibilities - depending on how the system is organized.  The relationship between franchisor and franchisor is one of supplier/vendor to buyer/purchaser.  

It is not surprising that they have different economic views of the trade - but, it doesn't make any sense to say that a purchaser is a better supplier.  They are two different economic roles, which are linked.  But it doesn't make a lot of economic sense to talk of eliminating the role of the franchisor.  (Whether you would to eliminate certain agents in the role is a different matter.)

People might want to read co-opetition and getting a better view of this relationship.

Innovative management

This is an interesting thought. In this model the franchisor becomes more of a servicer for franchisees. It looks like the franchisor has a leaner operation while the franchisees provide functional and management guidance.

It's a flatter franchisor. One of the problems with mid and senior management is that they become disconnected to customers. They become a buffer zone. But in Bloss's model, senior managers who work on the front lines, that is to say franchisees, lead the chain. It's very innovative and it helps get around some fundamental problems that plague most large chains -- be it corporate or franchise chains that are run like corporate chains.