Question

1. What are the advantages and disadvantages of operating a lodging property under a franchise agreement?

Answer 1

The main advantages are as below=

• By having the franchise agreement, it is possible to have an association with the strong brand that will help in attracting more guests
• the franchise agreement will facilitate the SOPs of the big and successful chains and it will help in improving the service quality and other processes of the property
• the franchise agreement will create a good reputation for the lodging property
• the franchise agreement also has the provision of facilitating the training to the manpower and it will be helpful in maintaining high service quality
• the franchise agreement also includes the conduct of different marketing programs that will be helpful for the business development

The main disadvantages are as below=

• This may have a large initial investment in the form of the franchise fee and regular fee paid
• The management will have less control over the operations of the lodge
• There will be a binding contract that will be difficult to breach
• There is always a risk of failed business as having franchisee is not the guarantee of any success