Franchise agreements More than 80% of IHG-branded hotels are covered by franchise agreements. IHG® franchisees benefit directly from our global support network, integrated sales, technology resources and award-winning marketing initiatives. Whether owners choose to franchise with us or opt for a management contract, we understand what it takes to build the successful relationships that businesses rely on over the long term. The hotel is owned and operated by Latin American Hospitality Management Inc., the hotel division of San Salvador-based Grupo AGRISAL, under a licensing agreement with a company within the InterContinental Hotels group.IHG has nearly 200 hotels in Mexico, Central and South America and the Caribbean. IHG owns hotels in almost every major market in Latin America and the Caribbean.The 198-room, 12-storey Holiday Inn Express Panama City, scheduled to open in July 2012, is the fourth of seven IHG hotels to open or are under construction as part of a long-term strategic agreement between IHG and Grupo AGRISAL`s hotel division. The three hotels currently open under this agreement include the Holiday Inn San Jose Escazu in Costa Rica and two hotels in El Salvador, the Holiday Inn San Salvador and the Crowne Plaza San Salvador.Upon its opening, the Holiday Inn Express Panama City will be IHG`s 24th hotel in Central America, including InterContinental Hotels & Resorts. Brands Crowne Plaza Hotels & Resorts, Hotel Indigo, Holiday Inn Hotels and Resorts and Holiday Inn Express. IHG has nearly 200 hotels in Mexico, Central America, South America and the Caribbean. IHG has hotels in almost every major market in Latin America and the Caribbean. Financial support: The franchisor does not offer a formal direct or indirect financing program.
HHFL, SCH or its subsidiary, General Innkeeping Acceptance Corporation (GIAC), may provide loans or guarantees. HHFL, SCH and GIAC intend to grant loans or guarantees on terms negotiated with the potential franchisee on a case-by-case basis, and any decision to grant a loan or provide a guarantee would be made at the sole discretion of HHFL, SCH or GIAC and would be subject to the approval of the Executive Committee and the Board of Directors. It is the sole responsibility of the franchisee to obtain adequate financing for all expenses related to the development, opening and operation of the hotel. Holiday Inn has a franchise fee of up to $50,000, with a total investment range of $7,544,298 to $24,836,120. The total investment required to order a typical 143-room Holiday Inn hotel, excluding the acquisition of the underlying properties and certain other costs, is $14,078,650 to $19,253,705. This includes a $50,000 deductible application (franchise fee), which may be reduced to $25,000 or $15,000 in certain special circumstances at the franchisor`s option. Whether we license or manage hotels on behalf of third-party hotel owners depends largely on the maturity of the market, the preferences of the owners and, in some cases, the respective brand. Mature markets such as the Americas and Europe mainly follow a franchise model, while emerging markets such as Greater China typically use a managed model. The total investment required to open a typical 93-room Holiday Inn Express hotel, excluding the acquisition of the underlying properties and other costs, is $7,881,597 to $11,081,667. As with the standard format, these costs include a $50,000 deductible deposit fee, which can be reduced to as little as $25,000 or $15,000 in certain circumstances.
Obligations and Restrictions: Whether franchisees are a natural person, corporation, partnership or other legal entity, the franchisor requires that they retain and exercise direct management control over the hotel`s business at all times, unless the franchisor has approved otherwise. However, the franchisor does not require franchisees to be personally involved in the direct operation of the hotel. The franchisor may include in the terms of license that require franchisees to engage a duly qualified and experienced management company (i) acceptable to HHFL or (ii) General Manager, Food and Beverage Manager or Sales Manager with at least two years of experience in such a position in a hotel operating under one of HHFL`s brands or in a hotel in a brand segment similar to the hotel. As defined by Smith Travel Research, Inc., the franchisor requires franchisees with management experience to supervise the hotel on the premises or hire a management company approved by it. A general manager who has successfully completed the franchisor`s training program must supervise the business directly on site. Franchisees must provide the hotel services described in the license and ensure that no part of the hotel or system is used to facilitate or promote a competing business. There are no restrictions on the guests to whom franchisees can sell rooms or other hotel-related goods or services. The growth in our franchise fees is driven by three levers: room growth, revenue per available room (RevPAR) and royalties. The franchise agreement is usually a standard contract, with some variations around the world.
A typical contract would normally have a license fee of 5-6% of the room`s revenue. However, this may vary depending on the brand and country. IHG has announced the signing of a franchise agreement for a new Holiday Inn Express hotel in Panama City, Panama. Jurisdiction Granted: The franchisor generally does not grant franchises for exclusive territories or territories. The license is only valid for a specific location and for a hotel`s license. The license is valid for the location specified in the license and not for any other location. Franchisees do not receive exclusive territory. Franchisees may face competition from other franchisees, hotels owned by the franchisor or its affiliates, or other distribution channels or competing brands controlled by the franchisor or its affiliates. .