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What Does It Take To Invest In a Hotel Franchise_ _ Sam ZormatiThe hospitality industry is a lucrative and ever-growing industry. Those who desire to get into the hotel business have an option of building their own brand or investing in a hotel franchise. Hotel franchises have the advantage of familiar names and credibility. What does it take to invest in a hotel franchise?

Secure funding

Just as in any other investment, a businessperson will require adequate funding to cater for operating costs, startup fees and taxes. An investor needs to review his/her financial and investment capabilities to ensure they will afford the purchase. They have options of getting other investorsĀ getting other investors on board to make up for any deficit they may be having. Banks are another source of income as they prefer giving loans to large and reputable franchises. The Small Business Administration Loans can benefit the investor if the franchise company is listed.

Proper Research and Review

An investor needs to know the type of hotel they want and the features it should have. This helps in selecting the hotel franchise company that matches their skills, talent, and experience. Their location of choice will to a large extent dictate the clientele. As an investor one should be aware of current trends and the pros and cons of different types of hotels. It is essential for an investor to compare the entire costs of affiliation for different franchises.

A person aspiring to invest in hotel franchise may buy an existing hotel, re-brand and improve it to meet the requirements of the parent company. He/she has an option of constructing a new hotel in their desired location.

Due Diligence

The next step after settling for a particular franchise entity is to research and get to know the franchisor. This can be done by visiting different franchisee and staying there for a few days. The experience will give the investor a feel of the quality of services and facilities. Talking to the owners of the facility will also shed light on what to expect from the franchisor.

A businessperson should review franchise agreement, branding agreement, and disclosure with a legal professional. The investor ought to understand the requirements of the parent company and know the kind of support the franchisor offers.

The Process

The franchisor has representatives that assess the proposed location, the competition, and the market. They prefer places where their brand will be successful. The investor fills an application and pays the necessary fees and then awaits consideration. A franchisor looks through the information in the application and may decline or approve the process. If approved, the investor pays the start-up costs and embarks on building his/her hotel.