How to Get a Hotel Franchise: Unlocking the Secrets to Success

The hotel business takes a lot of investment, and buying a hotel franchise is one of them. It could be easier to start a hotel business, but it is harder to survive in the competitive market. 

However,  after much effort and investment, you may still need help to succeed. In that case, a hotel franchise is an excellent opportunity for the hotel owner or business entrepreneur.

You may also ask can a hotel be franchised, definitely yes. A business owner can franchise hotels according to business requirements. So, it is essential to know how to get a hotel franchise. 

What is Hotel Franchise

A hotel franchise is a contract between the franchisee and the franchisor. The franchise or hotel owner pays a certain fee to run and operate their hotel under the reputed franchisor or brand. 

Franchising is an excellent opportunity for the new hotel business owner or entrepreneur. It allows them to benefit from the franchisor's reputation. 

Moreover, a hospitality franchise can get additional services from the franchisor, such as the operating system, marketing strategy, and business control.

Let's get into more details about the hotel franchise.

Franchise is a business model allowing users to use their parent company's name and reputation. Both the franchisor and franchisee benefit from this business deal. 

The franchisor or parent company gets the opportunity to expand its business. On the other hand, the franchise can quickly establish itself and earn a high-profit margin through the parent company's reputation. 

In a hotel franchise, the parent company provides licenses to the franchise under some terms and conditions. So, you must purchase a hotel franchise with the advanced hotel management system. It helps to manage your overall hotel operation. 

How to Get a Hotel Franchise: From Research to Grand Opening

Franchising is a very cost-effective business model for the hospitality industry. In the era of digitalization and modern work, people are more into travel and tourism. The rising amount of travel and tourism demands quality living and accommodations. 

However, the high demand has made it more competitive. Hotel owners have a fantastic opportunity to get their businesses franchised. You will find plenty of hotel franchises for sale but it is difficult to choose the right ones. 

So, walk with us and learn how to get a hotel franchise.

1. Do the Market Research

Market research is a must for every business. However, it is more critical for the hotel business due to high competition. Complete market research helps the company to understand the business conditions, profitability, and opportunities. 

When the entrepreneur does in-depth market research, it enables the entrepreneur or business owner to make decisions. From the market research, you will be able to know your competition. 

Moreover, market research will help to follow the trends and stay updated with recent technology. So, to learn how to get a hotel franchise, you must do market research.

Regarding hotel franchises, You have to do two essential tasks for market research.

• Identity Hotel Brands

You have to identify the hotel brands in the market. Hotel design and brand identity help to differentiate them from competitors. 

• Review Franchise Disclosure Documents (FDD) 

FDD is a document that provides all the details of a hotel franchise. It includes the cost, performance, limitations, responsibilities, etc.

2. Comparison and Selection

When you do the market research, it is time to compare and select the hotel brands. In this case, you must look for a well-established company that fulfills your requirements. 

First, you have to find out the hotel franchise companies and compare the costs. Comparing the price plays an essential role in choosing a hotel franchise. As part of the cost comparison, you must look for the franchise, marketing, royalty, and other investment fees. 

So, after comparing the cost and other objectives, you must select the hotel franchise.

3. Select a Location 

After selecting the brands, you have to choose the location. Remember, the right location is much more important for hotel franchise success. 

When selecting locations, do some tasks.

• Research on demographic and local demand

Proper demographic research is essential for the hotel business. It helps to understand the targeted areas of people's behaviors, preferences, and characteristics. Moreover, it helps to understand the demands of potential guests according to their choice. 

• Obtain Zoning approvals

Now, it is time to get the zoning approvals. Zoning approvals ensure that the property fulfills the hotel's building code and zoning criteria.

4. Financial Assessment and Funding

As we know, hotel franchises are costly. So, before proceeding with a hotel franchise, you need to determine your financial viability. In the hotel franchise model, the hotel owner or entrepreneur has to invest a large amount of money for different purposes. 

It includes franchise fees, marketing fees, staffing, and working capital. So, you have to determine your overall budget, including all the costs. 

So you must secure financing from different sources. Secure funding ensures your hotel's smooth operation. There are many different ways you can get funding for your hotel business. Here are some ways you can fund your business. 

• Small Business Administration(SBA) Loan

Small business loans are a favorable funding option for business entrepreneurs. They are popular due to their low interest rates and long-term payment options. 

• Private Investors

You can also secure your business with the help of private investors. This option is very flexible, and you may receive additional benefits when you work with private investors. 

• Commercial Bank Loan

Commercial bank loans are the most popular way to secure your business. They can provide a handsome amount of capital with a minimal interest rate. 

• Personal Savings

Your personal savings are also a great way to secure your hotel. In that case, you do not worry about interest or other costs. 

5. Contact the Franchisor

Once you have secured funding and selected your brand, contact the franchisor. There are multiple ways to contact the brands. You may visit their nearest official location or reach them through the official website. 

After reaching the franchisor, you must talk to the development team and explain your requirements and interests. Then, the team will explain the processes of getting a franchise and its rules and conditions. 

Moreover, they will also provide an application form for the additional process. 

6. Negotiation and Franchise Agreement 

Now, it is time to negotiate a franchise agreement.

• Negotiation 

Negotiation is a process where two or more parties discuss an agreement. Different discussions solve many issues and make the deal acceptable to both parties.

So, to get a franchise, you must negotiate with the brand. It should be done professionally so that both parties can benefit. Negotiations can be made regarding pricing, conditions, and other issues. 

• Franchise Agreement

After completing the negotiation, it is time to finalize the agreements. A hotel franchise can offer multiple agreements, such as:

• Lease Agreement
• Area Development Agreement
• Non-disclosure Agreement
• Indemnification Agreement
• Renewal Agreement
• Trademark Agreement
• Intellectual Property Agreement

These agreements are the legal process of forming a successful bond between the hotel franchise companies and the business owner. So, they are the important franchise agreements that every hotel franchise offers. 

After franchising the agreements, you have to legalize the documents. Legalizing documents ensures that both parties understand and agree to the terms and conditions and start a new journey together.

7. Build the Property

After finalizing the agreements and documentation, it is time to build the property. 

Matter to remember:

You must follow the franchise instructions while building the property. Here are the terms that should be followed strictly.

• Stick to Brand Standard

As we know, franchising deals with reputed brands. So, it is a must to follow the brand standards. Although the agreement specifies the design and operational requirements, you must follow the instructions and stick to the brand standard. 

• Do the Construction    

Construction is a lengthy and complex process. Constructing the hotel according to the brand standard could be much more challenging. 

In that case, you must hire an experienced and famous contractor to meet the standard. A sound output comes from the combined hard work of a good builder, architect, and interior designer. 

8. Training and Launch

When your property is entirely built, it is time to move forward. At that time, you have to prepare to launch your hotel. 

Here is a list of the tasks you should do after building your property.

• Brand Training

Most franchisors offer training sessions on franchise agreements. It helps them maintain their brands' reputation and follow standards. So, before launching your hotel, you must train all the staff to follow the brands. 

• Implement the Technology

Every reputed brand uses specific technology. To operate smoothly, you must implement those technologies in your system. This technology includes property management systems, POS software, hotel booking websites, and many others.

• Market and Grand-opening 

After implementing the required technology, it is time to market your hotel business. As the franchise brand is enough to market your hotel, you must do additional marketing. 

You may use different types of social sites, such as Facebook, Instagram, Twitter, and YouTube, as a marketing tool. 

Now, the longest waiting time is here. 

It is time for a grand opening. You can arrange grand opening sessions for your hotel. It can create a great vision for your hotel.

What Makes a Great Hotel Franchise

The franchise model is widely used in the business industry. Business entrepreneurs are attracted to it and have a great chance to reach a wide range of customers. So, hotel owners must be very careful when choosing trending franchises for their hotel. 

Here is a guide on what makes a great hotel franchise. So, why wait? Get the ideas, and know how to buy a hotel franchise, and turn your investment into profits.

• Strong Brand Recognition

A brand reputation is always appreciated. So, strong brand recognition is necessary if we talk about what makes a great hotel franchise. When a franchise has a good brand value, it is globally respected. Moreover, it also attracts more guests and builds trust such as marriott hotel franchise, hayat hotel franchise and so more others. 

• Competitive Costs and Clear Terms

A great franchise always has a competitive cost. It includes franchise fees, marketing costs, training costs,  royalty percentages and others. 

Along with these, a good franchise is crystal clear about the terms and conditions. It means there is no hidden cost, and the franchise policy is flexible enough.

• Strong Reservation System

A robust reservation system is an important feature of a great franchise. It enables a smooth hotel reservation and booking process. 

A good reservation helps to increase guest experience and flexible hotel operation. So, you must focus on the hotel reservation system when looking for a franchise.    

• Global Distribution Channels

Global distribution channels enable them to provide services all over the world. It is the network of any business that broadens market access. So, every reputed brand should partner with a global distribution system and online travel agency with advanced travel management systems. 

However, global distribution channels also provide valuable market insight that helps to stay competitive in the global market. 

• Comprehensive Support

Remember! A reputed brand always provides comprehensive support. This comprehensive support includes high-quality staff training. 

Moreover, comprehensive support includes operational guidelines, marketing strategies, technological solutions, and others. However, this support is part of agreements and helps maintain a business reputation. 

• Innovation and Adaptability

A well-renowned franchise always uses innovative technology. Advanced technology helps to stay ahead of the competition and updated with the trends. Innovative technology also helps to enrich guest satisfaction. Additionally, well known franchises can adapt to recent technology.

• Effective Marketing and Loyalty Programs

Want to know how to determine if a franchise is good? The answer is effective marketing and customer loyalty programs.  As we know, franchises offer different marketing and customer loyalty programs. 

It is an excellent opportunity for the business entrepreneur. When brand-level marketing is done, it drives more guests and more profits. Moreover, reputable brands also provide customer loyalty programs to attract more guests.

How Much Does it Cost to Open a Hotel Franchise

Now, the million-dollar question!!

How much does it cost to open a hotel franchise or hotel franchise cost?

Although, it is difficult to find out the exact cost of a hotel franchise. But, generally, a hotel franchise can cost thousands to millions of dollars. 

If we go into more detail, a hotel franchise can range from $20,000 to $5 million (Approximately), and the cost can be higher or lower. The cost of a hotel franchise depends on several factors. 

It includes brand reputation, locations, hotel size, marketing policy, terms and conditions, and licensing. So, finding the exact cost of getting a hotel franchise is almost impossible.

Here are examples of the most profitable hotel franchises and their hotel brand franchise fees.

1. Hilton Hotels and Resorts

Franchise Fee: $75K (average)

Franchising Since: 1967

Headquarters: McLean, Virginia

Royalty fee: 5.50%

Development Link:  https://www.hilton.com/en/corporate/development
 

2. Marriott Hotels & Resorts

Franchise Fee: $85k + $300/room > 25 rooms (average)

Franchising Since: 1965

Headquarters: Bethesda, Maryland  

Royalty fee: 6.00%

Development Link: https://www.hotel-development.marriott.com

3. Best Western Hotels & Resorts

Franchise Fee: $46K + $200/room > 50 rooms (average)

Franchising Since: 1978

Headquarters: Phoenix, Arizona  

Royalty fee: $1.44/room/day

Development Link: https://development.bwhhotels.com/content/developers/en_US.html

4. InterContinental Hotels

Franchise Fee: $75K or $500/room (average)

Franchising Since: 1956

Headquarters: Atlanta, Georgia  

Royalty fee: 5.00%

Development Link: https://development.ihg.com

5. Hyat

Franchise Fee: $100K or $300/room (average)

Franchising Since: 1957

Headquarters: Chicago, Illinois  

Royalty fee: 5.00%

Development Link: https://www.hyatt.com/development

Here are the some additional hotel franchise list with fees 

Source: hotelprojectleads

What are the Considerations Before Buying a Franchise

As the franchising hotel is highly invested, you must do it effectively. You may suffer a significant loss if you fail to choose a good franchise. Choosing a great franchise is a complicated task. 

But with the help of proper understanding and market research, you can get a good franchise. While getting a franchise, you have to consider several things. 

Here is the list of things to consider before franchising a hotel you must follow to get the franchise.

1. Industry

It is important to know the industry properly where you want to invest. So, in that case, you have to gather enough knowledge about the hospitality industry. 

However, when purchasing a hotel franchise, make sure the franchise fits the hospitality industry. Also, ensure the industry and franchise meet all your requirements.  

2. Market Demand

Market demand is one of the most important factors to consider first. As we know, the hotel and tourism industry has gone through constant changes. 

So, it becomes difficult for the business to follow and go with the trends. Following the terms, you can get franchises from brands that can go smoothly with the trends and stay competitive.  

3. Investment Cost

There is no compromise with the cost. So, before franchising, you must identify all the expenses connected to the hotel franchise. Remember, a hotel franchise investment can range from handsome to a high amount of money. 

In that case, you have to know your capabilities and invest accordingly. Moreover, you have to identify all the costs individually. It includes franchise fees, trading fees, royalty fees, marketing fees, training fees, and others.

4. Time Commitment

Time commitment is important for business deals. It is the amount of specific time sets for the businesses. However, the franchise can be dealt with in many ways, such as owner-operator or absentee owner. 

But remember, each deal has different requirements, and you must follow them. Moreover, you must consider the hours of operation and the amount needed for the franchises. So, you have to consider the time commitment before buying a franchise.

5. Agreement Terms

A franchise has different types of agreements, which can vary depending on the brand and its conditions. Here is a list of some franchise agreements that one should know before getting a franchise.

• Disclosure
• Trademark and Intellectual Property
• Support and Training
• Territory
• Fees and Expenses
• Site Selection
• Obligations upon Termination
• Arbitration
• Insurance and Indemnification
• Physical Premises and Renovations
• Records and Audits
• Transfer and Resale
• Long Term Duration
• Advertising and others.

6. Franchise Track Record

A franchise track record is a great way to determine a brand's financial stability, reputation, and credibility. A franchise is more successful than an individual new business. 

In that case, starting a company with a franchise is advisable rather than starting a new business. Most reputed brands have continuous positive feedback. 

So, you must go through the history of a brand's franchise track record.

7. Potential Profitability

Generally, it is recommended to deeply research franchise potential profitability. In any business, profits are the main target. You can get the franchisor's financial performance disclosure. 

It will help you get an idea of sales, marketing, brand conditions, profits, and others. So, it is definitely a wise decision to find out the franchise's potential profitability before getting a franchise.

8. Compliance and Regulation

If you want to know how to purchase a hotel franchise then you need to know the compliance and regulation. Every franchise has its own local laws and regulations. If you franchise with brands, you must follow these rules and regulations. Here is a list of standard rules and regulations for every franchise.  

• Business registration and licensing
• Accessibility compliance
• Employment laws
• Zoning and land use regulations
• Health and safety regulations
• Tax obligations
• Environmental regulations
• Food safety rules
• Hospitality industry licensing
• Building and fire safety codes
• Hygiene standards
• Alcohol licensing
• Guest privacy and data protection laws
• Franchise disclosure requirements and others.

Adhere to the rules and regulations to ensure smooth hotel operations. This increases guest satisfaction and improves brand reputation.

Final Thought

You must get a hotel franchise to expand your hotel business, increase hotel bookings and profits. A hotel franchise is a golden opportunity for the new hotel business entrepreneur. However, the entrepreneur needs to be very careful when choosing a franchise. A great franchise can take you to a higher level of success. So, know how to get a hotel franchise and start a new journey toward success and profits.