TRENTON, N.J. – Assemblyman Ron Dancer’s bill that will provide greater protections to hotel franchisees was released from the Assembly Judiciary Committee Monday.
The bill (A2682) would protect local franchisees – entities licensed to use a trade name, trademark, or characteristic for the marketing of goods or services – from burdensome requirements of franchisers. For example, franchisers would be forbidden from forcing franchisees from making expensive improvements more than once every five years, and must give franchisees rebates or other benefits received from vendors that the franchisee must use.
“The pandemic-related lockdowns hurt many New Jersey businesses, including the hotel industry,” Dancer (R-Ocean) said. “My bill, while not a direct response to those lockdowns, will balance the playing the field. This bill will ensure fairness and profitability for small business owners who run the brands on behalf of large corporations.”
Licensing a hotel franchise can cost millions between the initial fees and other investments. After that, according to the Fair Franchising Initiative, hotels face shrinking profit margins because of third-party online booking sites, like Travelocity or Expedia. Directives from the large companies – hotel franchises in New Jersey include Hyatt, Sheraton, and Motel 6 – can inflate costs for local businesses, hurting their bottom line.
“Costs continue to rise, and economic experts are claiming it may still be several years before the hotel industry gets to pre-lockdown numbers. The power in the relationship between the local business owner and a corporate entity is often lopsided, which my bill aims to fix,” Dancer said.