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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.

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