Tuesday, November 22, 2011
Member Benefit Programs a fraud?
"Member Benefit Discount" program allows Franchisors to share 5% of the 10% commission from agencies like AAA and AARP. They mandate franchise owners to offer a 10% discount on these programs, so they can get a 5% kickback. Franchisors state that the 5% profit that they make from the commission is spent on marketing for the franchisees. Unfortunately, with their lack of transparent disclosure the franchisees cannot confirm how the Marketing Funds are spent. I believe marketing funds have often been used for items that are not necessarily for Marketing the Brands. Due to the lack of transparency from franchisors such as Wyndham Hotel Group, all franchisees should continue to raise and ask questions regarding funds spent for Marketing.
Is the franchisor, pushing this rate code as it creates an "extra" member benefit for them in terms of an additional 5% in fees at the expense of the franchisees?
The Bottom line, franchisees give 20% discount off rack rate, 10% commission (of which franchisors makes 5%), 5% fees to Franchisors Rewards Program, plus GDS fees may apply and we as the operators suffer. Are they really benefiting the brands and the franchisees or are they "Helping themselves"? All hoteliers should stand united and fight the unfair practices of franchisors!
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