By Stanley Turkel, CMHS, ISHC
April 16, 2012

1.  California's "Level Playing Field for Small Business" Act of 2012 (AB 2305)
Was there ever a more appropriately-named state bill?  The franchise playing field needs to be leveled because most franchise agreements are sharply one-sided in favor of franchisors who have the arbitrary power to:

• impose higher fees
• grant new franchises (similar or sister brands) anywhere at its sole discretion
• disenfranchise exterior corridor properties
• reduce service to franchisees
• sell, merge or consolidate the franchise organization
• impose exorbitant liquidated damages in the event of termination
• restrict a franchise owner's freedom to sell his property
• require personal guarantees from owners of franchised hotels
• sell market data, including the names, addresses and preferences of millions of hotel guests
• control the agenda and output of the in-house franchise advisory council
• expand marketing and reservation funds without an independent audit and full disclosure
• change rules regarding training, technology upgrades, frequency programs, guest discounts, required franchisee services, quality standards.
• require the franchisee to make mandated upgrades and renovations
• impose a "choice of law" clause that stipulates that any litigation will be tried in the home state of the franchisor
• stipulate arbitration in the event of a dispute
• impose a "no jury" clause in the franchise agreement

Fair franchising is not an oxymoron.  In hotel franchising, state laws make a big difference in deciding disputes between franchisors and franchisees.  This is particularly true because there are no federal laws requiring franchisors to abide by the common law duty of good faith in their dealings with franchisees; no fiduciary duty even when the franchisor handles its franchisees' money in pooled advertising funds; and no duty of due care that franchisors must show to its franchisees.  It is the absence of national minimum standards of fair dealing that is responsible for most franchise-related litigation.  It is astounding that the only regulatory body overseeing the franchise industry, the Federal Trade Commission (FTC), says that it "does not have the resources to follow up on all meritorious complaints".  Remember that franchised industries employ more than eight million workers in over half a million small businesses.  Combined annual sales in these franchised businesses total more than $1 trillion in retail sales in the United States.

In 1992, the state of Iowa enacted a comprehensive fair franchise law that insured that the rights and responsibilities were fairly shared between franchisors and franchisees.  The Iowa law said that:

• the franchisee could sell the business to anyone as long as the new owners met the minimum standards the franchisor used in approving other business owners
• if a franchisor approved a new franchise within an "unreasonable proximity" of an existing franchise, the existing franchisee has the right of first refusal of the new business or a right to compensation for any lost market share
• an Iowa venue was guaranteed for lawsuits

The law was so abhorrent to the franchise companies that many of them stopped all franchising in Iowa until the law was repealed.  Both McDonald's and Holiday Inns sued the state challenging the constitutionality of the law.  At least 70 other franchisors withdrew completely from Iowa.  Gradually, under the intense and relentless lobbying efforts of the Iowa Coalition for Responsible Franchising (consisting of the largest franchise companies), the Iowa Franchise Investment Act was revised and weakened over the next few years.

Now, new fair franchising legislation has been introduced in California (AB 2305) ("Level Playing Field for Small Business") which is under consideration by the California Judicial  Committee and the Business Professions Committee.  Send your letter of support to AAHOA (attention: Vice President Laura Lee Blake: [email protected]) as soon as possible.

2.  Rooftop Urban Gardening
My new book, "Built To Last: 100+ Year-Old Hotels in New York" contains a chapter about the Ansonia Hotel built in 1904.  It was designed as a luxury apartment hotel on the upper west side of New York.  Its resplendent apartments contained multiple bedrooms, parlors, libraries and formal dining rooms with high ceilings, elegant moldings and bay windows. Of all the great features of this theatrical building, perhaps the most unusual was the urban farm on the roof of the hotel.  Developer W.E.D. Stokes had a Utopian vision for the Ansonia ?  that it could be self-sufficient, or at least contribute to its own support ?  which led to perhaps the strangest New York hotel amenity ever:  "The farm on the roof".  As Stokes wrote years later, it "included 500 chickens, many ducks, about six goats and a small bear." Every day a bellhop delivered free eggs to the tenants, and any surplus was sold cheaply to the public in the basement arcade.  Not much about this installation charmed the city fathers, however, and in 1907 the Department of Health shut it down.

Now, one hundred and five years later, opportunities for rooftop urban gardening are increasing as developers are providing roof space for herb and vegetable gardens. One such development is Liberty Apartments in East New York.  Another is Servian Gardens, an affordable development for seniors in the Bronx where about 40 residents have applied this year to share 36 agricultural plots on green roofs.

At Via Verde, a new affordable housing complex in the South Bronx, developer Jonathan Rose converted a fifth-floor green roof into a community garden for residents and their children.  The garden has already been planted this spring with everything from kohlrabi to kale by GrowNYC, a hands-on nonprofit organization that encourages environmental programs.

Some other residents have started a roof garden for youngsters in the Plymouth Tower co-op on East 93rd Street. One of the crops children planted last year were strawberries which reappeared this year to the delight of the children.

In contrast, Bright Farms, a private company that develops greenhouses, announced plans to create a sprawling greenhouse on a roof in Sunset Park that is expected to yield a million pounds of produce a year-without using any dirt.

The hydroponic greenhouse, at a former navy warehouse, will occupy 100,000 square feet of rooftop space.  This spring, Brooklyn Garage, another rooftop farm developer, is set to open a 45,000 square foot commercial operation at the Brooklyn Navy Yard.

Hydroponic agriculture, in which vegetables are grown in water rather than soil have increased in popularity because of advances in technology.  Hydroponic farms are ideal for rooftops, according to Bright Farms, because they have such high yields and are less heavy than soil-based installations.  They also use far less water, while diverting rain water from the sewer system.  The Bright Farms greenhouse will join a half-dozen commercial rooftop farms in New York City.

The Ansonia Hotel idea of an urban farm lives again!

3.  A Last-Minute Reprieve for the 115-Year Old Belleview Biltmore Hotel

A Miami partnership plans to restore the historic Belleview Biltmore Hotel in Belleair, Florida. Built in 1897 by Henry Bradley Plant, the hotel was added to the National Register of Historic Places in 1979.  However, since its closing in 2009, it has been periodically threatened with destruction.  The new owners plan to construct a new 153-room wing and to restore the existing 260-room hotel.  The Cabana Club area would become a 38-room boutique hotel while the Biltmore Golf Club would be upgraded.

The new owners include architect Richard Heisenbottle, real estate developer Hector Torres and tourism entrepreneur Charles Kropke.

Quote of the Month

"Whatever women do they must do twice as well as men to be thought of as half as good.  Luckily, this is not difficult."

                                                                                                Charlotte Whitton
                                                                                                Mayor of Ottawa, June 1963

Reviews of My New Book:  "Built to Last: 100+ Year-Old Hotels in New York"

*  "passionate and informative"
     The New York Times

*  "It's a terrific book"
     Fred Schwartz, President, AAHOA

*  "You have done an amazing job... your research into the history.... of these properties embellishes the topic immensely"
     Stephen Rushmore, President, HVS International

*  "I must say here that it has been a sincere privilege to review "Built to Last: 100+ Year-Old Hotels in New York"... I found it a fascinating       read and it should be for anyone interested in history, building design and hospitality..."
     John Hogan, CHE, CHA, CMHS, Ph.D.

To order the book, visit www.centuryoldhotelsinnewyork.com

This article is copyright protected by Hotel-Online. Reuse by other media or news outlets or organizations is prohibited without permission. Personal use and sharing via social media tools is encouraged.

---