Brand development executives share tips on navigating the franchise selection process.
WASHINGTON —What does it take to get a foot in the door with a new franchise? It’s all about finding the right fit, the right place and the right people, according to franchise development executives.
Speaking on a panel at the recent AAHOA Conference, executives from Best Western Hotels & Resorts, Choice Hotels International, Hyatt Hotels Corporation and Red Roof shared best practices on how to select a brand that aligns with owner goals and navigate the process of choosing a franchise.
Know the brand strategy
Brand panelists said knowing big-picture development strategies for companies and individual brands—especially when it comes to newer offerings from brands—can help potential franchisees know their options right off the start.
Julienne Smith, SVP of real estate and development for Hyatt, said that Hyatt started franchising 12 years ago. Its primary franchise brands are Hyatt Place and Hyatt House, though it also franchises others, including Hyatt Centric and Hyatt Regency.
“In the beginning, we were pitching … and now it’s performance that has garnered us a lot more interest,” she said. “So today we have a very proactive development plan.”
Ron Pohl, COO for Best Western, acknowledged that in recent years it became clear that the company needed more brand offerings, so it expanded its lineup to meet the needs of franchisees at various levels.
“We went from being a midscale-only brand to starting the economy segment with SureStay and offering three different product lines there, up to the upscale segment where we have Best Western Premier and BW Premier Collection,” he said.
With its various brands, Best Western now has a broader target of markets, from primary markets to secondary markets and college towns, which Pohl said helps franchisees in different locations.
For a company like Choice, with 12 franchise brands, it’s important to know “what slice of the business you’re going after,” said Brian Quinn, SVP of development for the company. “Whether it’s economy or midscale, upper midscale, upscale or extended stay, new construction or conversion, we’ve got products in all of those.”
Phil Hugh, chief development officer at Red Roof, said that while the company’s core Red Roof brand has long been a successful staple for the company and its franchisees, new options—like Red Roof Plus and the company’s new Red Collection soft brand—continue to broaden the appeal to different markets and new franchisees.
“Red Collection is an effort to get into center-city markets and more resort destinations, and we think this will open us up to a new customer and new franchisee,” he said.
Talk to the company
Different brands and companies have different requirements for potential franchisees, which makes personal connections with the company important, speakers said. For example, Smith said Hyatt requires franchisees have existing hotels in their portfolios before signing on with the company “so we can see how they operate, what their company culture is, how that might mesh with us because culture is so important to us.”
She said that process is “a mutual venture.”
“The potential franchisee is vetting us as much as we’re vetting them, and you can’t do that without personal engagement,” she said.
Hugh, Pohl and Quinn echoed the importance of that personal connection.
“It’s all about the relationship,” Hugh said. “We want to help you through the process from A to Z. If you don’t have a location, we’ll help you find a hotel. If you’re looking for a conversion or a team, we’ll help you find something to buy and walk you through the process.”
Pohl called the process “not a short-term relationship, but a long-term, family relationship we work toward.”
Find a mentor in the brand
Beyond talking to the brand itself, Quinn recommended finding a mentor franchisee who has worked with the company before. He cited members of the AAHOA community that help each other navigate the franchise process well.
“Having that mentor help you through the process is incredibly powerful and helpful,” he said.
He said that can be especially helpful when that mentor has started with a company at an entry-point brand then worked up to more advanced segments.
Hugh advised the same.
“Pick up the phone and call existing franchisees of whatever brand you’re looking at,” he said. “Many owners have been with brands for a long time. They’ve seen what’s happened over the years and they can give their honest opinion.”
Commit to investment
Panelists stressed that the franchise relationship isn’t just about what the brand can do for the owner; it’s more of a two-way commitment.
Hugh said it’s an immediate red flag when he encounters potential franchisees who don’t want to invest in their hotel.
“As soon as (franchisees) start asking for waivers for training because they’ve been in the business forever, or start talking about why they don’t need to do the PIP, that scares me,” he said. “Nothing frustrates me more as when people buy a hotel and don’t want to invest in it and keep it up to standards so that it’s well-performing.”
Smith and Quinn said it’s important to trust that franchisors know their data.
“Spending money on the front end can help you in the long run,” Smith said. “The other thing that causes us concern is not staffing your hotel well in advance of the opening. Get your director of sales and GM in place so you can do boots-on-the-ground direct sales. That’s what’s going to help your hotel ramp up quickest.”
Quinn reiterated that brand tools are there for a reason, and when franchisees fight those efforts, it’s alarming.
“It’s a warning to me if you’re going to fight the machine all the time,” he said. “The machine has been created to make you successful; use the tools that we’ve all put out there.”
At the end of the day, the process of choosing and keeping a franchise relationship comes down to communication, the speakers said.
“We’ve all been doing this a long time,” Pohl said. “If you need to know about where to go, we know. All the brands have experts out there who are well-trained and talented and can tell you what you need to know.”
Sometimes, however, difficult topics will come up, and that’s when communication is most critical.
“If you are a franchisee and you have a challenge or you’re late on your PIP or you have an impact concern, communicate,” Quinn said. “We as franchisors also have a responsibility to communicate. You will have pain points, but if it’s a long-term relationship, like any long-term relationship, you work through it.”