Protecting your brand is about ensuring the best franchisees represent your hotel.
A hotel chain can have the most creative marketing campaigns, an aesthetically impressive design prototype and top-notch central services, but if the individual franchisees aren’t performing up to par, none of it matters. “Your franchisees are the custodians of your brand; they’re your front line in dealing with your guest,” says Brian Leon, managing director, Franchise Growth and Development for Choice Hotels Canada in Mississauga, Ont. “It’s critically important to make sure you have the right people on the team.”
From a customer’s perspective, a black mark against one property could turn someone off the entire brand. That not only hurts the hotel company itself, but it hurts every franchisee in the system. It’s the reason why savvy hotel chains take specific steps to ensure every franchisee is representing its flags with excellence.
The first step is the screening process. Most brands agree every potential franchisee must be carefully vetted before being accepted into the system. “Our application process is very thorough,” says Manlio Marescotti, vice-president of Lodging Development for Mississauga, Ont.-based Marriott Hotels & Resorts Canada. Generally, when it comes to accepting new franchisees, Marriott prefers those who operate more than one property. “If they operate multiple properties, it suggests they have some sort of infrastructure in place that could support the individual property,” Marescotti explains.
As part of its screening, Marriott also has someone from its Operations department spend the day with the applicant at their property. In the case of a new build, it could be at one of their other existing properties. The company is looking to see if the property is well maintained and clean, he says, but it’s also trying to get a good sense of the culture at the property. “It’s about how they treat their employees and what their values are. Those are considerations we have as part of the application process.”
At Mississauga, Ont.-based InterContinental Hotels Group (IHG) Canada, Stuart Laurie, director of Franchise Sales and Development, agrees stringent screening is a must when choosing franchisees. He says a number of qualities are considered high priorities for his company’s brands. “We’re looking for well-capitalized individuals with strong balance sheets and owner/operator experience, with a strong business background,” he explains. Some of the questions Laurie’s team asks potential franchisees include: “Do they have experience with an existing franchise system? Are they familiar with our brand; our brand’s standards; with the cost of development, if we’re referring to a new development or even the cost of renovating a new hotel?”
When evaluating the franchisee, Choice not only looks at the person’s financing and business experience, it also evaluates how well they think that person will fit into a franchise system, especially when it comes to owners who’ve never been franchisees before. “One of the things we often say to a potential franchisee is that being part of a franchise system is not for everybody,” he explains. “We’re dealing with people who are entrepreneurial, and sometimes they can have a hard time fitting into the constraints of a franchise system,” he cautions. “So we try to probe into that; we make sure there’s a good fit from the standpoint of business philosophies,” says Leon.
Choice also hosts “Franchise Discovery Days,” where potential franchisees have an opportunity to come into the company’s Mississauga, Ont., head office to learn more about the system. They’re encouraged to ask as many questions as possible, says Leon, because the chain wants franchisees to make an informed decision about whether or not the company is the right brand for them. “It’s really about fit; if it’s not a good fit for them, it’s not going to be a good fit for us,” says Leon.
Once the franchisee is accepted into the system and the hotel is operational under a particular flag, strong communication between franchisor and franchisee is key. “We communicate with operators constantly,” says Vito Curalli, Hilton’s managing director of Sales for Canada, Latin America and International. “They get updates on what’s going on with the brand, sales and marketing — all of the things they could use on a daily basis.”
It’s also crucial to provide franchisees with concrete ways to continually improve their business. “You have to give them the tools,” says Marriott’s Marescotti, who notes his company offers a variety of training and development systems to keep everyone up-to-date, including frequent conferences and e-learning programs. Overall, says Marescotti, it’s important to respect the franchisees and make sure you’re doing all you can to help them reach their potential. “Our philosophy is if we treat our associates and employees right, they’ll treat our guests right, who will in turn keep coming back,” he says.
Still, a franchisee must have stringent monitoring systems in place to ensure the property continually meets the chain’s standards. “There are a number of different mechanisms we have for monitoring a hotel,” says Choice’s Leon. These include regular quality assurance audits done by an outside company, which measure issues such as cleanliness, condition and maintenance as well as a comprehensive guest insight survey process. The guest surveys, he says, “give us an excellent picture of what guests are saying about the hotel, which is really the most important thing.”
In its property-evaluation process, Marriott uses a proprietary colour-coded rating system. Four different colours are used: green, indicating the best, then clear, yellow and red. “Red is a big problem,” says Marescotti. If a property gets a red on one of its reports, the chain sends a letter to the GM informing him the property is in the “red zone.” The GM must then propose an action plan the hotel will implement to improve the shortfall. The property will need to stay out of the red zone for two full years. If it falls back into that zone within the two-year period, the process gets escalated with a notice of default. They still have time to turn things around, but they’re back to square one with the two-year time period starting from scratch again. If it falls into the red zone for a third time within that period, it gets quite serious, and the property could face termination from the brand. Marescotti says this doesn’t happen too often, “we really try to work with our franchisees, because termination isn’t the preferred outcome.” However, there are times when a franchisee is terminated in order to preserve the integrity of the brand.
IHG’s Laurie agrees, adding, “we try to avoid termination wherever possible. It’s expensive for us, and it’s expensive for the franchisee. We consider ourselves a franchise-friendly company, so we do our best to work with the franchisee to make improvements.” Laurie continues: “If we’re hitting a wall, there’s only so much we can do. We have to protect brand integrity.” He adds that today, more than ever, franchisees are urging him to become stricter when it comes to terminating the poor performers, because franchisees want to protect their own investment by keeping the chain’s stellar reputation. “If there’s a bad apple out there, it certainly doesn’t help the other franchisees,” he says.
At Choice, the company embarked on a new strategic plan in 2008, and, part of that strategy, was to be diligent about weeding out the bad apples. “One of the things we heard from our franchisees is you can’t be reluctant to act when you need to protect the brand from hotels that are damaging,” says Leon. “So we’ve been very aggressive about that over the last couple of years. It’s meant losing a lot of properties, but it’s also meant raising the overall bar in our system.” At the same time, he says, all of the new hotels they’ve been bringing into the system recently have been consistently performing well above brand average. Between getting rid of the poor performers and bringing in superstars, the result has been higher overall brand standards, “Our ultimate goal is to add hotels into the system that bring up our overall levels of guest satisfaction and the overall quality of our portfolio across the country.”
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