Hotel Online  Special Report
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Meaningful Dialogue Should Be the
‘Best First Step’ to Dispute Resolution
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Fair franchise agreements are not impossible to negotiate or terminate – and in most cases,
litigation can be avoided. Sometimes is just takes talking less, listening more and hiring
an impartial third party to help along the way 
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By Steven J. Belmonte, September 2006

In the days when an ice cream sundae cost much less, a 10-year-old boy entered a hotel coffee shop and sat at a table.  A waitress put a glass of water in front of him.

"How much is an ice cream sundae?" he asked.  "Fifty cents," replied the waitress. The little boy pulled his hand out of his pocket and studied the coins in it.

"Well, how much is a plain dish of ice cream?" he inquired.  By now more people were waiting for a table and the waitress was growing impatient.

"Thirty-five cents," she brusquely replied.  The little boy again counted his coins.  "I'll have the plain ice cream," he said.

The waitress brought the ice cream, put the bill on the table and walked away. The boy finished the ice cream, paid the cashier and left. When the waitress came back, she began to cry as she wiped down the table.  There, placed neatly beside the empty dish, were two nickels and five pennies.

You see, he couldn't have the sundae, because he had to have enough left to leave her a tip.

What lesson should we learn from this story? 

You don’t always know what’s on a person’s mind until you have meaningful dialog.

Have you ever blurted out something before you really thought about what you were saying, and in doing so hurt someone else or lost a customer? Or have you ever done a lot of talking when you should have been listening? It’s easy to do! 

So often we believe that what we have to say is so much more important than what we might hear. It’s been said: “You have two ears and one mouth, therefore listen twice as much as you speak!”

The hospitality industry is built on service and exceeding the expectations of those you are serving. That can not be accomplished without proper communication or meaningful dialog between management and staff and staff and guests. Whether you are a line-level employee, a manager, an independent hotel owner, a franchisee or a franchisor, providing exceptional service by listening to all those around you is paramount to success – both personal success and the success of the enterprise.

Many hospitality executives are in leadership positions today because of their ability to generate meaningful dialog among those they manage and because they were remembered and appreciated for a job well done somewhere along the way.

For example, this month a 20-year hospitality veteran was selected to serve as CEO, president and partner of new membership-brand hotel company. He was chosen because he was remembered and appreciated for the work he had done previously as the president of a leading hotel franchise which he doubled in size during his tenure. The brand grew quickly because this leader was committed to maintaining meaningful dialog with franchisees. He earned the brand president position after being remembered and appreciated for the work he had done as head of one of the industry’s largest and most successful management companies. He was selected to run the management company because his work as a general manager was remembered and appreciated by many, including the hotel owner, his peers and guests. He became general manager after working his way up through the hotel ranks after being remembered and appreciated by countless other general managers and owners for a job well done. 

I happen to know this hospitality executive personally – he started his hospitality career with no formal education at the age of 16 as a desk clerk at a Chicago hotel. That person is me.

Advocating Fair Franchising

Today, as President, CEO and Partner of Lexington Hotel Corp., Vantage Hospitality’s new brand in the upper-mid to upscale lodging segments, it is my job to deliver meaningful dialog between myself and our members, and to encourage our members to spur meaningful dialog between staff and guests. In turn, Lexington will be appreciated and remembered as a three- to four-star hotel brand that has members’ best interest at heart.

As hospitality/guest-service providers, we as an industry need to be slower to speak and quicker to listen. Then, and only then, can we truly act upon what our guests are asking us to do. The same holds true in the franchise arena. 

I was told that one of the reasons I was selected to lead Lexington Hotels is because I am widely remembered and appreciated as being an advocate of fair franchising – spurring meaningful dialog between franchisors and franchisees to obtain fair and equitable agreements under my company Hospitality Solutions LLC. Oftentimes franchisees are quick to act out against franchisors when the business is not performing, and sometimes franchisors are quick to slap owners with outrageous fees or threaten to remove them from the franchise altogether. Through meaningful dialog, however, and the willingness to listen twice as much as they speak, franchisors may discover a new way to help the franchisee turn the business around or exit the franchise as painlessly as possible. Here’s a case in point:

Recently I met a franchisee who was facing $110,000 in liquidated-damage claim assessments by his franchisor. He 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. 

Instead, the franchisee had been referred to a third-party franchise negotiations specialist by a friend who had faced a similar situation. The franchisee contacted the negotiator and an exit agreement was reached that resulted in a substantial liquidated-damage claim reduction and the right for the franchisee to completely walk away from his existing franchise agreement with far less pain than he originally thought. 

Kudos to the franchise company! By willingly entering into meaningful dialog with the franchisee, the franchisor took the “best first step” to understanding the situation, reaching an equitable resolution, and avoiding costly and time-consuming litigation. 

Through Hospitality Solutions LLC and the many franchisor/franchisee hats I’ve worn throughout my career, I’ve seen first hand the increase in dissatisfaction with 15-year contracts, outrageous contract and royalty fees, high costs involved with transfer clauses, termination fees, and the amenity creep. As I map out the future for Lexington and our members, I vow to change all that by putting my money where my mouth is and listening twice as much as I speak.

Today’s Lexington will provide an affordable alternative to franchising. Members will enjoy low fees, short-term contracts, no liquidated damages, a voice and a vote in the brand’s direction, and a choice of amenities to meet individual market demands.

As I have advocated for many years, the same structure can be very successful in franchising, as long as solid, equitable franchise contracts are being hammered out and franchisees are able to negotiate fair termination agreements, should the need arise. 

Negotiating Your Contract

Whether you’re a novice or an experienced hotelier, negotiating a fair franchise agreement can be complicated. If you can’t decipher between a balanced contract and one that is more one-sided, it’s strongly recommended that you hire an experienced, impartial third party who understands both hospitality and franchising to assist in the negotiations of the agreement. 

Hospitality professionals are available to provide owners and operators with franchise/contract-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. Equally these professionals can negotiate entrance or exit agreements far faster and less expensively than an attorney.

Typically a project can be wrapped up 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: Services are offered for a one-time, low-cost fee. With true negotiating power in their hands, franchisees are guaranteed to enter into a franchise relationship that is a win-win. 

So talk less . . . listen more . . . and enter into meaningful dialog as much as possible.  If you want to be successful, “Just Do It!” 
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About Steven J. Belmonte

Steven Belmonte is the CEO, President and Partner of The Lexington Collection, Vantage Hospitality’s new membership brand hotel in the upper-mid to upscale lodging segments and the 12th largest hotel company worldwide. The Lexington Collection premiered in the second quarter of 2006 with a portfolio of 12 properties open or under contract throughout the United States with more new construction and conversions in the pipeline. 

Belmonte also remains President and CEO of Hospitality Solutions, LLC, which 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. 

Former President and CEO of Ramada Hotels, 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. 

For more information on Hospitality Solutions LLC, call (973) 598-0839, email stevenbelmonte@aol.com or visit www.stevenbelmonte.com. For information about becoming a member of The Lexington Collection, call (973) 598-0201, email sbelmonte@LexingtonHotels.com or visit www.LexingtonCollection.com.

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Contact:

Steven J. Belmonte
Hospitality Solutions LLC
(973) 598-0839
stevenbelmonte@aol.com
www.stevenbelmonte.com

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Also See: Every Franchising Obstacle Presents an Opportunity to Improve Your Position / April 2006
When Looking for that Brand ‘Differentiator’, Don’t Overlook the Obvious / Milton Velinsky and Steven Belmonte / March 2006

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