Hotel Online  Special Report
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Every Franchising Obstacle Presents an
Opportunity to Improve Your Position
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Hospitality Solutions LLC assists California franchisee facing $110,000 in liquidated damages in exiting the franchise contract with zero LDs; As of April 1, owner is flying a new flag after negotiating a flexible year-to-year, flat-fee contract with a new franchisor
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By Barbara A. Worcester, April 2006

Let me tell you a story: 

In ancient times, a King had a boulder placed on a roadway. Then he hid himself and watched to see if anyone would remove the huge rock. Some of the king's wealthiest merchants and courtiers came by and simply walked around it. Many loudly blamed the King for not keeping the roads clear, but none did anything about getting the stone out of the way.

Then a peasant came along carrying a load of vegetables. Upon approaching the boulder, the peasant laid down his burden and tried to move the stone to the side of the road. After much pushing and straining, he finally succeeded. After the peasant picked up his load of vegetables, he noticed a purse lying in the road where the bolder had been. The purse contained many gold coins and a note from the king indicating that the gold was for the person who removed the boulder from the roadway.

The peasant learned what many of us never understand: Every obstacle presents an opportunity to improve your position.

On April 1, a franchise sign at a limited-service roadside hotel in South Elmonte, Calif., was taken down and replaced by a new flag. It’s a fresh start for hotel owner Sanjay Patel, who had just avoided being crushed by a $110,000 boulder – the liquidated damage claim assessment charged by the previous franchisor. 

Mr. Patel didn’t have the money to pay the LDs. He also didn’t have the time or energy to venture into a costly and lengthy litigation. What he had instead were friends in the hotel industry who know the ins and outs of franchise agreements and peers with first-hand experience in resolving franchisee/franchisor disputes and negotiation new franchise agreements. Those friends were Steven Belmonte and Thomas Giuliano at Hospitality Solutions LLC.

In about 45 days, Belmonte and Giuliano negotiated an exit agreement for Mr. Patel that resulted in $0 liquidated damages and the right for him to completely walk away from his existing franchise agreement. For a flat fee of $3,900 and a no-risk guarantee, Hospitality Solutions LLC removed the boulder from Mr. Patel’s path.

While not every liquidated damage claim negotiation has these dramatic results, Hospitality Solutions LLC does deliver a happy ending. Last year the company successfully negotiated more than 40 new franchise agreements and more than 100 termination projects.

Hospitality Solutions LLC provides new franchise agreement negotiations, franchise termination and liquidated damage claim negotiations, mediation, expert witness, litigation support, motivational speaking, market studies, feasibility studies, on-site analysis, ownership and development assistance, and tax credit and benefits services to the hospitality and service industries.

Blame it on the contract

Founded four years ago by Belmonte, Hospitality Solutions LLC was started to offer owners and operators franchise-negotiation services at a fraction of the cost—and, frankly, at a fraction of the time—that it normally takes to hire a lawyer to do the job. This service never existed before Hospitality Solutions came along. The bonus is that the company can negotiate entrance or exit agreements far faster and less expensively than an attorney. 

Belmonte and Giuliano can wrap up the typical project in as little as two weeks—the time it usually takes lawyers just to get you on their calendars. Cost-wise, there’s no comparison: This service is offered for a one-time, low-cost fee, complete with a no-risk guarantee. With true negotiating power in their hands, franchisees are guaranteed to enter into a franchise relationship that is a win-win. 

Whether you’re a novice or an experienced hotelier, the negotiations process is complicated, so do your homework. Make sure that the franchise company: (1) has successfully operated the brand for at least five to 10 years at multiple locations; (2) is not plagued by litigation or complaints from disgruntled franchise owners; and (3) has a balanced, fair franchise contract.

Hire an expert

If you can’t decipher between a balanced contract and one that is more one-sided, hire an experienced, impartial third party who understands both hospitality and franchising to assist in the negotiations of the agreement. As the Patel story attests, Belmonte and Giuliano, with two decades of contract-negotiating and dispute-resolution experience under their belts, are certainly two of the best franchise negotiations experts in the industry. 

Before founding Hospitality Solutions LLC, Belmonte served as former president and CEO of the Ramada hotel chain, a brand he doubled in size to encompass more than 1,000 hotels with nearly 135,000 hotel rooms throughout the United States. He also served as co-founder, president and CEO of Equity Hotel Corp., ranked among the top 10 largest management companies. The firm operated a variety of hotels, including such brands as Sonesta, Sheraton, Radisson, Holiday Inn and Ramada, as well as major independent properties. Belmonte also served as chairman of the American Hotel & Lodging Assn.’s Educational Foundation and serves on the Board of Directors of Arlington Hospitality Inc. and the Industry Relations Committee for the Asian American Hotel Owners Assn.

Before joining Hospitality Solutions LLC, Giuliano served as director of business development for WorldHotels negotiating and executing all licensing agreements and hotel compliance for the Americas. Before that, he was director of franchise development for Cendant Corp., where he oversaw the entire sales process, from initial application to franchise-agreement negotiations to hotel integration. 

The bottom line is that these two hospitality franchise veterans are thorough professionals who have the best interests of all parties at heart in negotiating agreements and resolving disputes. 

Listen to others

Here’s what Mr. Patel shared with me about his recent Hospitality Solutions LLC experience:

“As a hotel owner I am faced daily with many challenges,” he said. “Competition, A.D.R., occupancy, impact . . . you name it. Everything factors into my hotel’s performance. If I had negotiated an equitable franchise agreement from the very start—one that fit my business philosophy and operating needs—I would not have found myself facing possibly the biggest challenge of my life: getting out of my franchise agreement. 

“Thanks to Steve Belmonte, Tommy Giuliano and Hospitality Solutions LLC, I didn’t have to spend $50,000 to retain a lawyer and take the dispute to court or pay out over $100,000 in franchise-termination fees,” he said. “They understood my situation, kept me informed every step of the way, sent me updates on their progress, and before I knew it, I was out of my contract and looking for a new franchise partner.”

Today Sanjay Patel has a new lease on life with a new flag flying high above his hotel. He also has a big smile on his face and he’s sleeping a lot better at night too. He found a new franchise partner that that is the right fit for him and which offers a flexible, year-to-year, flat-fee contract. 

Lesson learned: “Every franchising obstacle presents an opportunity to improve your position through Hospitality Solutions LLC.”

If your obstacle is entering a new franchise agreement or exiting an existing one with liquidated damage claims, call Steve Belmonte at (973) 598-0839 or email him at stevenbelmonte@aol.com

About Barbara Worcester and PRPRO
Barbara A. Worcester is President of PRPRO, a hospitality-specific public relations and marketing communications firm based in Cleveland, Ohio, and the press agent for Steven Belmonte and Hospitality Solutions LLC. PRPRO writes and distributes client-based news releases to the hospitality trade media, national news publications and wire services; designs brochures and e-newsletters; assists in media buys and plans; coordinates direct marketing campaigns; and provides event and tradeshow management services exclusively for the hospitality industry. Prior to founding the company in February 2001, Worcester served for more than 10 years as Senior Editor of HOTEL & MOTEL MANAGEMENT magazine, researching and reporting on advancements in hotel technology, design and operations. In addition to Hospitality Solutions LLC, PRPRO's impressive list of clients include:  Aquatic Trends, Clairvoyix, Digital Alchemy, Energy Eye, Hotel Technologies, ICE Portal, Leonardo, MTech, Multi-Systems Inc., PhoneSuite, TimeLox,  VingCard Elsafe and Zontec.

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Contact:

Steve Belmonte
President/CEO
Hospitality Solutions LLC
Tel: (973) 598-0839
stevenbelmonte@aol.com
www.stevenbelmonte.com
 

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