Two different relationships
Under a management contract, a brand runs your hotel for you. Under a franchise, you run it yourself, or through a manager you appoint, and pay to use the brand’s name, standards and distribution. Both are common in India, and many brands offer both.
What a management contract gives you
- An experienced team and systems from day one.
- Less day-to-day involvement for the owner.
- Often easier financing, because lenders recognise the operator.
In return you pay higher fees and give up much of the day-to-day control, while still carrying the financial risk.
What a franchise gives you
- Lower fees, usually a royalty and marketing contribution on room revenue.
- Full control over staffing, costs and local decisions.
- The ability to change the management team without changing the brand.
In return you take on the work and risk of running the hotel well, to the brand’s standards.
How to decide
Ask yourself three questions. Do you, or can you hire, people who know how to run a hotel? How much time do you want to spend on the hotel? And how much do the fee savings of a franchise add up to for your hotel over ten years? Amit models both options in rupees for each client, because the answer depends on the specific hotel. Read more on choosing an operating model.
