Here’s a quick review of the basic pros and cons of buying a hotel franchise. Every investor is different. Depending on who you are, some of the “pros” may actually be “cons” and vice versa. Consider this a starting point in your evaluation of hotel franchise opportunities.
Starting with the good stuff, let’s look at the advantages:
Reduced start-up risk – you are working with someone who has done this before successfully.
Turnkey operation – Once again, nothing to reinvent the wheel of processes, procedures or acquisitions. Your franchisor has already built the system.
standardized systems – Back-end financial, IT and accounting systems are already in place, so you won’t waste your time implementing reservation systems.
purchasing power – as part of a larger whole, you get the benefit of buying in volume.
Readily available consulting – experience counts and your franchisor has been around the corner. He asks for all the help he is willing to give.
Marketing – branding and marketing are already available. You are not chasing unique 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 is evident!
Now let’s take a look at the disadvantages.:
less freedom – You are married to your franchisor – for better or worse!
royalty payment – as a franchisee you pay for the previous supports.
costs – Hotels are businesses with high capital and operating costs.
Lack of support – If your franchisor doesn’t help as you expect, you may be out of business.
Inflexible Systems – even if you have a better way to manage reservations, you are using your method.
unbalanced contract – all franchise agreements, not just for hotels, are biased towards the franchisor.
Dependent on the franchisor – Your performance is your performance.
These are all things to keep in mind as you move towards a decision about buying a franchise or hotel business.