Question

You’re the general manager of a hotel situated along a beautiful stretch of beach on a tropical island. one of the oldest of six large resorts in the immediate area, your hotel is owned by a group of foreign investors. for several years, it’s been operated as a franchise unit of a large international hotel chain, as have all the other hotels on the island (such as hilton, Hyatt, Marriott, and Sheraton). for the past few years, the hotel’s franchisee-owners have been taking most of the profits for themselves and putting relatively little back into the hotel. they’ve also let you know that their business is not in good financial health and that the revenue from the hotel is being used to offset losses incurred elsewhere. in contrast, most of the other hotels on the island have recently been refurbished and plans for two brand-new hotels have been announced for the near future. A team of executives from franchise headquarters has just visited your hotel. they’re quite disappointed in the property, particularly because it’s failed to keep pace with other resorts on the island. they’ve informed you that if the property isn’t brought up to standards, the franchise agreement, which is up for review in a year, will be revoked. you realize that this move would be a potential disaster because you can ill afford to lose the franchisor’s brand name, access to its reservation system, or any other benefits of the franchise arrangement. sitting alone in your office, you’ve identified several seemingly viable courses of action:

1. convince the franchisee-owners to remodel the hotel. you estimate that it will take $8 million to meet the franchisor’s minimum standards and another $10 million to bring the hotel up to the standards of the island’s top resort.
2. convince the franchisor to give you more time and more options for upgrading the facility.
3. allow the franchise agreement to terminate and try to succeed as an independent hotel.
4. assume that the hotel will fail and start looking for another job. you have a pretty good

Answer 1

A franchise is a business model where a person or group purchases the rights to start a business based on a model designed by the franchisor.

Step-by-step explanation:

A franchise is a business model where a person or group purchases the rights to start a business based on a model designed by the franchisor. In return for the franchise fee and royalty fees, the franchisor provides support, training, and access to their brand name and reservation system. In the given scenario, the general manager of a hotel is faced with the possibility of the franchise agreement being revoked if the hotel is not brought up to standards.

The manager has several options:

1. Convince the franchisee-owners to remodel the hotel to meet the franchisor's minimum standards and bring it up to the standards of the island's top resort.
2. Attempt to negotiate with the franchisor for more time and options for upgrading the facility.
3. Allow the franchise agreement to terminate and operate as an independent hotel.
4. Start looking for another job.

The manager must weigh the potential costs and benefits of each option and make the best decision for the hotel's future success.