Hotel franchising allows business owners to operate a hotel property under a hotel brand's name and distribution channels while retaining control of the property. The business owner signs a franchise agreement with the hotel brand to operate under their name in exchange for franchise fees. Franchise agreements tightly control brand standards, terms, assignability, and fees. Choosing the right franchise requires assessing finances, researching brands, matching skills and finances to a brand, submitting a questionnaire, reviewing disclosure documents and agreements, and consulting a lawyer.

2. FRANCHISING
Hotel franchising is an arrangement between a business owner in which
hotel property is operated under a hotel chain franchise agreement. The
franchisor's brand, distribution channels and intellectual property are used
by the business owner – freeholder (property owner) or tenant – to operate
the property while retaining the risks, liabilities and control of the property.
The hotel business owner (franchisee) signs an agreement with a hotel
brand (franchisor) to operate the property under a franchise agreement in
exchange for a franchise fee. Hotel owners or tenants set up their own
team or engage an independent operator to run their hotel business, with
whom they enter into an operating agreement.

3. FRANCHISING

4. Franchise Agreements
The terms and provisions most tightly controlled by the franchisor in the
franchise agreement are brand standards and guidelines, term,
assignability, and franchise fees. Operators are commonly concerned
about the compliance of the business owner with the franchise
agreements because of their different – often conflicting – aims and
objectives.
A manchise agreement is an arrangement with a hotel brand management
company that contains an option to convert into a franchise agreement
once the hotel business owner has developed the skill and knowledge to
operate the hotel.

5. Franchise Agreements
The contract reverts to the brand's franchise agreement after the initial
period of traditional hotel management provided by the brand operating
company, which reduces the fees payable by the hotel owner at the later
stage of the operating term.
Although a brand management company may offer the business owner
both a hotel management agreement (HMA) and a franchise, they are
separate agreements. Although the legal paperwork may be combined,
they provide two different services.

6. Franchise Agreements
The asset-light strategy of hotel brands to hold a reduced portfolio of
properties in favor of lighter portfolios is commonly achieved through
franchising. It allows hotel companies to grow business with limited
requirements for capital and to focus on fee revenues and fee margins.
A franchisee normally must to pay a "joining fee" as a contribution to the
capital of the organisation. In return they get the right to sell the
franchisor's well known and well marketed product in a given locality;
provided that they buy supplies from the franchisor and sell goods/services
in the standardised style.

7. Franchise Agreements
Other monies (eg. Rent) may also be payable by the franchisee, and they
may pay slightly more for supplies than in a free market situation. The
franchisor may also take a percentage of sales or profit made.
Agreements may be individually drawn up, and customised differently for
each franchisee.

8. Best hotel franchise opportunities
Days Inn
Initial franchise fee: $35,000
Initial investment: $194,401 to $7,835,580
If you’re looking for an affordable hotel franchise, Days Inn could be right
for you and your budget. Days Inn hotels are part of the Wyndham Hotel
Group. This brand is also seeing international expansion, so if you’re
looking to open a hotel abroad, this might be the right choice for you.

9. Best hotel franchise opportunities
Super 8
Initial franchise fee: $25,000 to $35,000
Initial investment: $209,638 to $4,444,387
Another affordable hotel franchise for those on a tighter budget is the
Super 8 brand. Ever wondered where that name comes from? Originally,
the rooms cost just $8.88 to rent per night. Not anymore. While an
affordable brand, becoming a Super 8 franchise owner will still take a
significant investment. The Super 8 brand is growing within the U.S., as
well as in China and Canada.

10. Best hotel franchise opportunities
Motel 6
Initial franchise fee: $25,000
Initial investment: $2,607,700 to $3,842,600
While the franchise fee for Motel 6 is only $25,000, the initial investment
can still be over $2 million.
Don’t discount this hotel brand just because it offers discounted rooms.
From 2007 to 2017, the number of Motel 6 franchises has quadrupled.
That’s a good bet for success. This hotel franchise also has great brand
recognition with travelers.

11. Best hotel franchise opportunities
Hyatt Hotels & Resorts
Initial franchise fee: $60,000
Initial investment: $13,645,000 to $20,604,000
As one of the leading brands in hospitality around the world, you won’t be
surprised that the initial investment and franchise fee for a Hyatt hotel is
high. With multiple subsidiary brands and operations in over 56 countries,
investing in a Hyatt hotel franchise comes with lots of upsides.

12. Best hotel franchise opportunities
Hampton by Hilton
Initial franchise fee: $75,000
Initial investment: $4,213,600 to $14,896,500
When you’re looking for just the right balance between budget and quality,
Hampton by Hilton might be worth a look. Both Hampton Inn and Hampton
Inn & Suites represent wise hotel franchise choices for business owners
looking to start in the hotel business. This brand is loved by hotel franchise
owners and travelers alike.

13. Best hotel franchise opportunities
InterContinental Hotels Group or IHG
Initial franchise fee: $50,000 to $75,000
Initial investment: $7,530,521 to $98,487,600
The InterContinental Hotels Group or IHG is actually a collection of
different franchises. If you’re looking to work with IHG, you could be
working with hotel franchises such as Holiday Inn, Crowne Plaza, or
Intercontinental.
Even with their exorbitant price tag, this group of hotel franchises is seeing
significant growth. IHG has more than 5,000 franchises around the world.

14. Best hotel franchise opportunities
Sheraton
Initial franchise fee: $85,000 to $112,000
Initial investment: $883,500 to $75,576,000
As part of the Starwood Hotels & Resorts Worldwide, Inc. brand, Sheraton
is a well-known, respected, and highly recognizable brand. If you’re
looking for a luxury hotel brand to enter into the hotel franchise industry,
you might just be able to find the right deal with Sheraton.

15. Best hotel franchise opportunities
W Hotels Worldwide
Initial franchise fee: $60,000
Initial investment: $10,565,000 to $21,828,000
Part of the Marriott International, Inc. brand, W Hotels Worldwide is
revolutionizing the hospitality market. W Hotels Worldwide strives to be
innovative, inspiring, and infectious. This hotel franchise comes with a lot
of personality, and may be the perfect fit for someone looking for
something outside of the usual.

16. Best hotel franchise opportunities
W Hotels Worldwide
Initial franchise fee: $60,000
Initial investment: $10,565,000 to $21,828,000
Part of the Marriott International, Inc. brand, W Hotels Worldwide is
revolutionizing the hospitality market. W Hotels Worldwide strives to be
innovative, inspiring, and infectious. This hotel franchise comes with a lot
of personality, and may be the perfect fit for someone looking for
something outside of the usual.

17. How to buy a hotel franchise
Assess your finances
The first step when considering buying a hotel franchise is the cost.
Investing in a hotel franchise is no small matter. In exchange for a proven
business model and recognizable brand name to operate under, you’ll
need to shell out a hefty upfront investment—often hundreds of thousands
of dollars.
To see if this is even a possibility, you’ll need to assess your own finances
to decide the amount of capital you have to invest, as well as what
franchise financing options you have.

18. How to buy a hotel franchise
Research hotel franchises
There are a lot of advantages and disadvantages of franchising, and each
franchise is unique, meaning it has its own specific pros and cons.
Once you have an overview on what hotel franchises are within your
geographic location, skillset, and budget, you can dig deeper into the
brands and find out which ones you like and don’t like. There are plenty of
websites online, like Franchising.com, that go deep into the individual
qualities of different hotel franchises. You can also look at each business’s
website to get a better understanding of the brand and how it operates.

19. How to buy a hotel franchise
Match your skills (and finances) to the right hotel franchise
As you begin to narrow down your list of hotel franchises that interest you,
you can begin matching the brand to your skills and finances.
Hotel franchises come in a wide range, from budget motels to high-end,
luxury hotels. Some hotels simply operate rooms for guests to stay while
others also offer conference rooms, full-service dining, and bar space.
Some hotels cater to business travelers while others focus on tourists and
families.

20. How to buy a hotel franchise
Request a hotel franchise questionnaire
The first step in a franchise application is the hotel franchise
questionnaire. This questionnaire will include questions about your basic
information, your proposed location for the hotel, and how you would
operate the hotel. The franchisor will also want to know information about
your background, your experience in operating a business or hotel, why
you’re interested in owning a hotel franchise, and any management
experience you have.

21. How to buy a hotel franchise
Obtain hotel franchise disclosure documents
The most important document within the franchise agreement is the
franchise disclosure document (FDD). To be compliant with the law, the
franchisor should send you this document at least 14 days prior to when
you’re supposed to sign it so you have adequate time to examine the
document and to have it reviewed by a lawyer if you choose to.
Also keep in mind that while the FDD is regulated by federal law, there
are also state laws that regulate franchises. Each state has slightly
different franchise rules.

22. How to buy a hotel franchise
Consult with a hotel franchise attorney
While you’re not legally obligated to hire a lawyer when joining a
franchise, it’s highly recommended. When dealing with a legally binding
document that will affect your business for the foreseeable future, you
should always take extra care to make sure there are no hidden clauses
or red flags that could cost you down the road. A lawyer with experience
in franchise law, or dealing with hotel franchises specifically, can be well
worth the expense so that you don’t enter into an agreement that you
don’t fully understand.

23. How to buy a hotel franchise
Review the hotel franchise agreement
The franchise agreement includes everything from the type of hotel, the
geographic location for the hotel, the marketing budget, the operating
documents that will be provided by the franchisor, and the amount of
supervision and control the franchisor has over you and your franchise.
Larger hotel franchises likely have pre-written franchise agreements, as
these should be consistent for every franchisee under one brand. In
general, these franchise agreements are non-negotiable. However, you
should still have a lawyer review the franchise agreement to make sure
that you’re entering into a legal and fair franchise relationship.

24. How to buy a hotel franchise
Review the hotel franchise agreement
The franchise agreement includes everything from the type of hotel, the
geographic location for the hotel, the marketing budget, the operating
documents that will be provided by the franchisor, and the amount of
supervision and control the franchisor has over you and your franchise.
Larger hotel franchises likely have pre-written franchise agreements, as
these should be consistent for every franchisee under one brand. In
general, these franchise agreements are non-negotiable. However, you
should still have a lawyer review the franchise agreement to make sure
that you’re entering into a legal and fair franchise relationship.