Final answer:
A franchise hotel is operated by a third party who pays franchise fees to use the chain's name and systems. This arrangement benefits both the franchisee, by providing a branded business model, and the franchisor, through brand expansion with reduced risk.
Step-by-step explanation:
A franchise hotel is a chain hotel run by a third party where the chain receives some sort of franchise fees. This business model allows for the brand consistency of a large chain with the local management and investment of a franchisee. Franchisees typically pay for the privilege of operating under the chain's name, which includes initial start-up fees, royalty fees based on revenue, and sometimes additional fees for marketing and reservations driven by the chain's systems.
The franchise fees serve as remuneration for the use of the brand and its associated systems and support. This franchising arrangement benefits both parties as it provides the franchisee with an established brand and support system, while the franchisor can expand their brand's footprint with reduced risk and investment.