HOSP 180 Lecture Notes - Lecture 2: Franchising, System 6, Feasibility Study

• School: University of Delaware
• Department: Hotel, Restaurant and Institutional Management
• Course: HOSP 180
• Professor: Kline

Document Summary

Primary growth and development strategy for hotels and motels during the. Benefits both franchiser (who wants to expand business rapidly) and franchisee (who has the financial backing but lacks specific expertise and recognition. Some franchise by individual outlets and others by territory. Hotel development and ownership - flourishes by franchising and management contracts. Franchising - a concept that allows a company to expand more rapidly by using other people"s money rather than acquiring its own financing. A set of plans and specifications from which to build. Participation in volume discounts for purchasing furnishing, fixtures, and. Not until the 1960"s that hilton began to franchise. Two major challenges for the franchisor: maintenance of quality standards, avoidance of financial failure on the part of the franchisee. Franchise fees vary according to the agreement. Average agreement is based on 3-4% of room revenue equipment. Low fee % charged by credit card companies. Must pay high fees, both to join and ongoing.