Like a marriage, an ideal relationship between a franchisor and franchisee should be based on trust, open communication, transparency and a shared vision for the future. Though technically it is a business arrangement, with the franchisee being the customer of a brand, many successful franchisor and franchisees view their relationship as akin to a partnership.
“I think the relationship should truly operate as a partnership, even before we sign our first franchisor agreement. They are more than royalty and revenue generators—they are like our stockholders. Our success is deeply tied to the franchisee,” said Sara Dinger, EVP of franchise operations with My Place Hotels.
Role of a Franchisee
A franchisee is invested in the success of the branded hotel and the relationship between the parties should be nurtured at every step. It is important to build relationships as far up the chain of the brand as possible. “We attend events, we participate in OACs, anything we can do to get face time with any of the leadership is important and something that has allowed us to build on our success year after year,” said Grey Raines, managing partner of Raines Hospitality which counts Hilton and Marriott among the hotel brands it manages.
Dinger said that GMs who stay engaged within the brand only leads them to being more confident. “Taking ownership of the asset you’re ultimately responsible for is always a good approach. Treat it like it’s your own.”
Role of a Franchisor
Ensuring that the franchisee is getting the return on investment that they need, as well as the tools and resources and services they need to be successful, is how Jordan Langlois, senior VP of franchise operations, Sonesta, describes the job of a franchisor.
For example, a franchisor provides brand standards, marketing, advertising, social media and many other resources and ongoing support to its franchises.
“We rely on them for data. They see customer trends earlier than we may see in a single asset. The tech side has really become extremely important, as has the robustness of their rewards programs and reservations systems. At the end of the day, we know that the best bookings we are going to see are direct bookings from Brand.com. We rely on the brands for negotiations with online travel agencies to leverage their entire portfolio, to drive down those fees,” added Raines.
And it’s a mutually beneficial arrangement.
“We thrive the most when our franchisees are thriving. The most important thing is to provide the best support and collaboration with them to ensure the operation is profitable. We want to help and support in any way we can,” said Zack Gharib, president, Red Roof, adding, “That is the key—their success—being profitable and delivering a great experience for the guest.”
Key Components of a Strong Relationship
Communication and Transparency
Communication is the foundation of all relationships, whether personal or business. Ideally, the communication should work both ways, with both sides being as transparent as possible about any issues.
Starting that communication at the very beginning of the relationship is ideal. “We’ve taken a very direct approach to making sure we welcome our potential franchisees to our corporate office in Aberdeen. It is unique to us and gives them the ability to sit across the table from all the stakeholders and really get to know one another. That really sets the tone for fostering that mutual respect and collaboration,” said Dinger.
And as the relationship progresses, Dinger said that at any given time, franchisees are encouraged to pick up the phone to have conversations. “We’ve built a transparent relationship and want them to encourage them to reach out to us as frequently as they’d like,” she said.
Many brands, like Sonesta, assign an owner-franchise service representative to serve as a liaison between the owner and the brand and communicate regularly, both individually and to the community of franchisees. These account managers provide day-to-day tactical support. “They are available and do quarterly, proactive outbound calls. We don’t just sit back and wait for the phone to ring when an owner has an issue—we do a quarterly outreach,” said Langlios, adding that the franchises are also assigned a regional director who is out in the field and visits for consultations and trainings.
Regular check-ins are a necessity so that both parties can express any concerns. Even just a ‘hello’ communicates that the brand is proactive and is paying attention.
“We are communicating with the brand pretty regularly across our portfolio. Weekly connections of some type in some capacity; quarterly calls and then an in person meeting once a year is really the minimum,” said Raines.
One of the most sought-after attributes in a relationship of this nature is accessibility: being able to reach people when needed. “There are so many daily challenges in running a business. As franchises grow, people get shifted around to different departments. That can be big issue with different franchises,” said Steven Mendel, Red Roof property owner of Riverbrook Hospitality. He added that at Red Roof, that has not happened. “Our rep is always just a phone call away. That it's been the same person is really helpful and comforting for us.”
The best channels in which to communicate are, said Gharib, whatever, whenever and however the owner wants to proceed. “I believe in meeting people where they are. If they want to meet in person, I’ll be on a plane tomorrow. We remain adaptable in this regard.”
”It’s nice to have the type of relationship where you feel like you can reach out and talk to the big guys and that they will be responsive,” added David Byrd, VP and director of operations of two Sonesta brand hotels in Arizona.
“Communication preferences vary by individual and today’s technology offers numerous ways to stay connected. However, in the hospitality industry, the most effective approach remains personal interaction—meeting in person whenever possible fosters stronger relationships and more meaningful engagement,” said Lily Hu, EVP of business strategy, Crescent Hotels & Resorts.
Trust
Trust is an intangible element of a good relationship and in hospitality, the trust piece is huge. “When we enter into a franchise agreement to build a hotel, we have to trust that the brands will protect us and manage the inventory properly,” said Raines. Even a small decision by the franchisor has a trickle-down effect to individual assets and ideally, those decisions will have a return on investment for both parties.
Part of that trust component is franchisees knowing that they can rely on the brand. For Sonesta, Langlios said that their corporate philosophy is ‘fast, friendly and flexible.’ For example, regarding the first prong, Langlios said, “We have a 12-hour resolution commitment to the owners. It comes down to trust and reliability. Owners have to trust that we have their best interest in mind,” he said.
Collaboration: Alignment of Goals
Viewing the relationship as a mutually beneficial one while moving forward together with a shared vision for the asset is key. Franchisors want to work with owners who are on the same page as them regarding how to get to the next level or keep the operations running smoothly and efficiently. Raines said it is important to keep the franchisor apprised of what needs to be done and why, such as the need to spend money for a renovation, for example, and the brands that understand that are the ones with whom his company continues to work.
Gharib added that it is very important to get their franchisees’ feedback and ideas about what is working or not and that Red Roof implements and change directions based on that feedback. “We rely on adaptability. We want to learn and share and grow together, sometimes embracing those new ideas and embracing opportunities and taking risks. We’re in this together.”
Arguably, a strong relationship between the parties leads to a better performance of an asset. And the recognition that that each party has something to learn from the other is one of the key elements to a fruitful and long-lasting partnership.
Additional Tips for Developing a Good Franchisee-Franchisor Relationship
“Understand the leadership hierarchy. Layers of infrastructure have grown as the brands have grown; they all function differently and separately from each other, so never assume sales is talking to operations or to revenue management. Go directly to those leaders in those divisions to make sure you are getting what you need to optimize operations of the hotel.”
—Grey Raines, Raines Hospitality
“Recognizing and celebrating success is important to do. As an industry we all do a great job of recognizing those team members that really bring ‘hospitality‘ into the hospitality industry.”
—Sara Dinger, My Place Hotels
“The feeling we like to see is that the franchisor is really committed to us, that we’re not just a number. We need to have people behind that property number we can call and get on the phone. It really comes down to commitment, and communication is something we believe we need and expect from a franchise to have the relationship really prosper.”
—Steve Mendel, Riverbrook Hospitality
“The one tip I have in a franchise relationship is it’s really important to commit, on both sides, with respect, dignity and care. At end of day, we’re all operating businesses, we all want to achieve success and support each other. That two-way street communication goes a long way.”
—Zack Gharib, Red Roof
“It’s a 24-hour a day relationship; it’s always there, it always has to be tended to. I think it can go both ways. I think that when there’s the sense that I can go to the franchisor and say, ‘hey, I think, I have this connection/idea/relationship that I think can benefit you as a company,’ that is important to be able to do. All the ideas and thoughts and benefits should not just be flowing one way. When you want to provide mutual benefit, that is the sign of a very healthy relationship.”
—David Byrd, Sonesta ES Suites Goodyear
“It’s been something I’ve been doing for 20+ years and I think it’s really showing them that you care and that you have empathy. I still have owners that own a 40-room hotel that have my direct cell number and I will make the time and energy to hear the good, the bad and the ugly and put together a strategy that matters. That is what has made us successful: they know they have that lifeline and they know they are not a number.”
—Jordan Langlios, Sonesta
“Franchisees must be committed to upholding the brand standards, serving as its ambassadors through their hotels while franchisors must equally prioritize the success of their franchisees and ultimately their real estate. This mutual commitment fosters collaboration and an exchange of feedback, ensuring both sides thrive.”
—Lily Hu, Crescent Hotels & Resorts
This article was originally published in the May edition of Hotel Management magazine. Subscribe here.