Hotel franchises: pros and cons
Here’s a quick review of the basic pros and cons of buying a hotel franchise. Every investor is different. Depending on who it is, some of the “pros” may actually be “cons” and vice versa. Consider this as a starting point in your evaluation of hotel franchise opportunities.
Starting with the good, let’s look at the pros:
Start-up risk reduction – you are working with someone who has done this successfully before.
Turnkey operation – again, do not reinvent the wheel in processes, procedures or acquisitions. Your franchisor has already built the system.
Standardized systems – Back-end accounting, IT and financial systems already in place, so you won’t waste time implementing reservation systems.
Purchasing power – as part of a bigger whole, you get the benefit of buying in volume.
Consulting available – experience counts and your franchisor has been right around the corner. Ask for all the help they are willing to give.
Marketing – branding and marketing are already available. You’re not chasing one-off travel reviewers to get your name out there.
Financial assistance – some franchisors are willing to help you finance these high capital projects.
You are your own boss – the glory of that goes without saying!
Now let’s take a look at the downsides.:
Less freedom – You are married to your franchisor, for better or for worse!
Payment of royalties – as a franchisee, you pay for the above supports.
Costs – Hotels are businesses with high capital and operating costs.
Lack of support – If your franchisor does not help you as expected, you may be knocked out.
Inflexible systems – even if you have a better way to manage reservations, you are using their method.
Unbalanced contract – all franchise contracts, not only for hotels, are inclined towards the franchisor.
Dependent on the franchisor – their performance is your performance.
These are all things to consider when making a decision about buying a franchise or hotel business.