Licensing Agreement In Hospitality

One of the main components of the acquisition of a hotel and the conclusion of a franchise agreement is the real estate improvement plan or PIP. If an existing hotel does not meet the brand requirements that apply to a branded hotel, there could be major – and expensive – renovations to a new FLA, new furniture and new equipment. In the context of buying and selling, hotel buyers need sufficient time to obtain and lease PIP costs. As part of the FLA negotiations, it is recommended that the new franchisee negotiate with the brand the scope of the PIP and the completion date of the PIP. The brand may exclude or delay the implementation of certain components of the PIP on the basis of the recently completed renovation work, the nature of the hotel itself (e.g. location. B, age or type of product, especially for soft brands) or other factors that support the exemption. The franchise agreement is a legal contract between the owners and the brand, which establishes labour relations, fees, responsibilities and obligations of both parties, as well as the main rules of exit from this agreement. The number of fees and the total amount paid to the franchisee: the fees paid to a franchisee are part of the negotiable franchise agreement. Remember, the franchise agreement tends to be written in favor of the franchisee. If you come passionately with hospitality and the topics I shared and visit our blog on, or use our one and done subscription to deliver real-time articles in your inbox.

These provisions reflect some of the best opportunities for franchisees to increase the value of their franchise agreement. In addition, by focusing on more negotiable provisions and not seeking to negotiate the strictly controlled provisions of the FLA, franchisees will conduct a much more fluid and efficient negotiation of their FLA. Given this scenario, the hotel brand (such as Marriott, IHG, Hilton, Accor/SBE) is the manager and the owner of the hotel is the managed owner. They signed a hotel management contract for a hotel brand (like Ritz Carlton, Sofitel). The owner of the hotel bears all the risk of exploitation. They also charge basic taxes, trademarks, incentive fees, marketing fees, sales and loyalty fees, IT fees and more. Hotel management agreements can be long and complex. Branding is often done through a franchise or licensing agreement of a company owning the brand.