Skip to content

Search

Latest Stories

AAHOA highlights fair franchising's significance in FTC comment

AAHOA's submission documents 69 hotel brand contacts since March 2022

AAHOA highlights fair franchising's significance in FTC comment

AAHOA EXPRESSED CONCERNS about unfair franchising practices to the Federal Trade Commission in response to their request for public comment on franchise agreements and business practices. According to AAHOA, the FTC has a critical role in regulation of the franchise industry, including ensuring adequate protections are in place and that franchisers are operating in compliance with the FTC’s legal requirements – both as they currently exist and are apt for modernization.

“In identifying an array of problematic, unfair practices and provisions within hospitality franchising, AAHOA aspires to advance the interests of its franchisee members and advocate for both enforcement and reform,” states AAHOA’s letter to the FTC.


In response to reports of "unfair and deceptive practices" harming franchisees, the FTC began a process in March to gather comments from business owners regarding the disclosure and contractual terms of franchise relationships, covering their extent, application, and impact. AAHOA's response, driven by more than a year of member advocacy, builds on the momentum for sustainable franchising practices, AAHOA said.

“The association’s submission reflects at least 69 documented contacts with hotel brands and their representatives since March 2022,” AAHOA said.

AH APRIL COVER AAHOA transition Bharat Patel Copy scaled AAHOA Chairman Bharat Patel on stage at AAHOACON23.

"We look forward to the FTC’s anticipated efforts to identify and rein in certain practices of the hospitality franchisers that take advantage of their extensive market power to the detriment of our members,” said Bharat Patel, chairman of AAHOA. “AAHOA members are ready and willing to assist the FTC in its work to ensure fairness and transparency are hallmarks of the franchise industry."

In the latest edition of Asian Hospitality’s Leadership series, AAHOA’s former and new chairmen emphasized the association’s commitment to serving the needs of its members as its primary purpose. AAHOA members, who own 60 percent of U.S. hotels, contribute approximately $368.4 billion in annual economic output, equivalent to around 1.7 percent of the U.S. GDP, according to Oxford Economics.

Key concerns 

12 POINTS OF FAIR FRANCHISING GUIDE AAHOA’s 12 Points of Fair Franchising reflect the current business landscape and the long-term, mutually beneficial relationship between industry franchisors and franchisees.

In its comment to FTC, AAHOA emphasized its 12 Points of Fair Franchising, which serves as an educational tool for AAHOA-member franchisees.

“These 12 Points are aimed at promoting sustainable practices that acknowledge and protect the contributions of small business owners and entrepreneurs,” AAHOA said.

According to AAHOA, the association’s comments covered various issues, including but not limited to:

  • The exploitation of market power by franchisers
  • Rebates and arbitrary mandates that result in increased costs for franchisees
  • Limited or non-existent negotiation abilities for franchisees, leading to franchisers imposing exploitative terms.

"On behalf of our nearly 20,000 AAHOA members who are responsible for 1.7 percent of the nation’s GDP, we voiced our concerns and highlighted the importance of ensuring fair treatment of Franchisees, because this impacts the U.S. economy,” said Laura Lee Blake, AAHOA president and CEO. “We commend FTC Chair Lina Khan and the rest of the commission for providing this opportunity. It is critical that the FTC use its influence and enforcement powers to ensure a more equitable franchising industry that protects the investments of hard-working small-business owners."

Franchise advocacy principles

Moreover, the association’s comments also highlighted its Four Core Pillars as a focal point. According to AAHOA, Franchise Advocacy, which shapes its advocacy endeavors, focuses on the following principles:

  • Full disclosure of vendor rebates, derived from Franchisee purchases, amounting to tens of millions of dollars, with the objective of returning them to Franchisees for system improvement.
  • Fair compensation for hotel owner Franchisees when the brand sells guest loyalty points, ensuring equitable profit sharing.
  • Encouraging fair pricing and competition by restricting mandated vendors for non-trademarked products and promoting diversity of options.
  • Prevention of unilaterally imposed and arbitrary Franchise fees without appropriate disclosure and approval processes.

Proponents versus detractors

AAHOA has consistently sought direct discussions with franchisers regarding the franchising relationship. However, some have not seen eye to eye.

“While some franchisers have maintained open and productive dialogue, others chose to disengage from AAHOA due to its exercise of its First Amendment right to support legislation in New Jersey, which aligns with the association's Fair Franchising principles,” AAHOA said. “In a collective action, five national hotel chains withdrew their support for AAHOA and declined to participate in the association's annual convention held in Los Angeles in April. Moreover, several of them organized competing events within close proximity to AAHOA's convention venue.”

ENEWS 05 03 23 Choice convention Pacious original scaled Pat Pacious, president and CEO of Choice Hotels, said the conflict between AAHOA and his company is not about fair franchising and that dialogue between the two parties must continue.

Marriott withdrew support for AAHOA in January due to their stance on fair franchising and support for New Jersey Assembly Bill 1958. Choice also followed suit in February. Additionally, companies like IHG Hotels & Resorts and Hilton did not have booths at the AAHOACON show. On the other hand, G6 Hospitality, BWH Hotel Group, and Red Roof have publicly endorsed AAHOA's 12 Points.

In a May edition of the Leadership Series, Choice's President and CEO, Pat Pacious, discussed the ongoing debate. He highlighted Choice Hotels' franchisee-friendly approach and stressed the significance of open dialogue and finding common ground with AAHOA to rebuild a strong partnership and address industry challenges.

“Considering the high stakes involved and the reluctance of certain brands to engage in direct discussions with AAHOA regarding franchising challenges, particularly the specific provisions of the New Jersey legislation, the association has conveyed the concerns of its member hoteliers to the FTC in response to their recent request for comments,” AAHOA said.

Franchiser-franchisee relationship is vital

Amidst ongoing hotel recovery from the pandemic, workforce shortages, and competition from home-based rental apps, a mutually productive relationship between franchisers and franchisees is vital for the hospitality sector and the overall economy. Unfortunately, the positions taken by hotel brands hinder this relationship and impede the overall health and growth of the hospitality sector, AAHOA said.

Meanwhile, AAHOA's May survey revealed that just 5 percent of franchisee respondents find their current franchise agreements to offer fair terms and a balanced relationship with their franchisers. Additionally, a significant 72.6 percent of respondents expressed potential intentions to terminate their franchised businesses within the next year, provided there are no penalties involved.

More for you

FIFA Club World Cup Boosts Hotel Occupancy in U.S. Cities
Photo by Dan Mullan/Getty Images

Report: CWC drives hotel gains in some U.S. cities

Summary
  • The FIFA Club World Cup is boosting hotel occupancy in several host markets.
  • Occupancy increases vary by market and by match within markets.
  • The tournament may be hit by falling international arrivals.

THE FIFA CLUB World Cup is driving hotel occupancy increases in some of the tournament’s 11 host markets, according to STR. The tournament, which began June 11, serves as a precursor to next year’s World Cup in the U.S.

The Club World Cup includes matches in Atlanta; Charlotte, North Carolina; Cincinnati; Los Angeles; Miami; Nashville, Tennessee; New York City; Orlando, Florida; Philadelphia; Seattle; and Washington, D.C.

Keep ReadingShow less
Peachtree Group's Residence Inn by Marriott under construction in downtown San Antonio, topping out milestone reached, June 2025

Peachtree tops out San Antonio Residence Inn

Peachtree Hotel to Open in Summer 2026 with 117 Extended-Stay Rooms

PEACHTREE GROUP HELD a “topping out” for its Residence Inn by Marriott in downtown San Antonio, Texas, marking completion of the structural phase of the 10-story, 117-room hotel. The property, co-developed with Austin-based Merritt Development Group, is scheduled to open in summer 2026.

The extended-stay hotel will be owned by Peachtree and managed by its hospitality management division, the company said in a statement.

Keep ReadingShow less
Air India plane crash 2025
Photo by Sam PANTHAKY / AFP

Air India reducing flights after deadly crash

AIR INDIA WILL reduce international service on widebody aircraft by 15 percent through at least mid-July, according to media reports. The decision comes less than a week after the June 12 crash of an Air India airliner carrying 230 passengers and 12 crew members in Ahmedabad, India, that killed 246 but left one survivor among the passengers.

The airline said the reduced service due to the safety inspection of aircraft and ongoing geopolitical tensions in the Middle East, which have disrupted operations, resulting in 83 flight cancellations over the past six days, according to ABC News. Passengers can either reschedule their flights at no additional cost or receive a full refund.

Keep ReadingShow less
hihotels executive team honored for long-term service and loyalty in hospitality

Hihotels recognizes eight company leaders

EIGHT LEADERS OF hihotels by Hospitality International, Inc. are being recognized by the company for their combined 121 years of service. The company was established in 1982 as an alternative to other, established brands.

The honorees include Paul Vakharia, hihotels’ senior director of franchise development for the Northeast Region who has been with the company for 25 years. Chhaya Patel, franchise development coordinator, also has been with the company for 25 years.

Keep ReadingShow less
ICE Raid Resumes in Hotels & Farms After DHS Reversal
Photo by Mario Tama/Getty Images

Reuters: ICE resumes hotel immigration raids

ICE Reverses Decision to Pause Raids on Key Industries

U.S. IMMIGRATION OFFICIALS have reversed enforcement limits at hotels, farms, restaurants and food processing plants days after issuing them, following conflicting statements by President Donald Trump, according to Reuters. ICE leadership told field office heads on Monday it would withdraw last week's directive that paused raids on those businesses.

ICE officials were told a daily quota of 3,000 arrests—10 times the average last year under former President Joe Biden—would remain in effect, two former officials said in the report. ICE field office heads raised concerns they could not meet the quota without raids at the previously exempted businesses, Reuters reported, citing a source.

However, it was not clear why the directive was reversed.

Keep ReadingShow less