Overcoming Challenges Between Brands and Licensees: Best Practices in Franchising from the HSMAI Global Distribution Advisory Board

Michael Hucho, Management Consultant, HSMAI Global Distribution Advisory Board Member 

Across the world, long term relationships with loyal franchise partners are being put to the test. This is especially true for mid-size operating companies working in a multi-brand franchise environment. Hotels are increasingly questioning what they receive in return to their brand royalty fees, their system and transaction fees, loyalty fees, etc.  

Tensions on the franchisee side are the top line cost of distributions service delivery and staff that has been made redundant or had their hours reduced. Existing contracts are now under review leading to renegotiation in Europe. However, there are challenges on the franchises side as well such as increasing pressure, brand compliance, operational quality, and guest experience.  

The HSMAI Global Distribution Advisory Board met to discuss the challenge and share best practices.  

10 Best Practices in Handling Brand/Licensee Challenges 

1. Focus on how to mitigate pain points for operators. Staff sizes are shrinking, so think about making their lives easier, make reservation delivery easier and more seamless.  
2. Create partnerships with B2B and B2C distributors to fill in holes formed from the loss of segments (i.e. – group, business).  
3. Concentrate on content and how to update content. Create a survey for hotels about what services they’re offering. This helps show hotels the brand value and support. 
4. Streamline transaction fee pricing so all brands have the same fee structures. This makes it easier for our development offices to articulate the fee regardless of brand.  
5. Standardize systems – for starting into the franchise arena get compliance from the start. For companies with acquired brands, move towards standard systems.  
6. Create a distribution manual to communicate with franchise partners on the commercial side that includes resources for them to understand their obligations, rate plans, the fees, etc.  
7. Communicate – Send emails (and track open rates), host town halls, and call franchisees.  
8. Educate – Do internal education to make sure franchisees understand the key points of distribution, whatever the hot topic is that week or that month and give them the tools and the resources.  
9. Measure – Have a scorecard that includes pieces of distribution, especially around rate parity and including photo scores, operational compliance, guest review scores.  
10.  Combine feedback with action plans and resources. That’s the job of a franchise company – to supply the resources. Then that makes that make operators successful.