Franchising the pathway to the american dream

The first franchised hotels were The Ritz-Carlton properties in the early 1900s. But franchising really took off in the 1950s, spurred by the creation of the interstate system, which allowed and encouraged people to take to the roads and travel.

Best Western, Holiday Inn, Ramada Inns and Howard Johnson became familiar names and consumers grew to trust them since they offered consistency and similar pricing from one property to the next. Brands like Hilton and Marriott joined the franchising fray in the 1960s, as more consumers began flying, and 20 years later most brands started diversifying into different segments of the hotel industry.

Franchise agreements are still typically written for ten years or more, but the exit provisions today are more complex and often more forgiving,said Bryan Younge, managing partner, Horwath HTL, a hospitality consulting and strategic advisory firm in New York City. “Franchisors would rather work with an owner to improve performance or move the property into a different segment than force a termination,” he explained.