Docstoc

Sample Letter of Intent for Franchising - PDF - PDF

Document Sample
Sample Letter of Intent for Franchising - PDF - PDF Powered By Docstoc
					                                DAYS INNS WORLDWIDE, INC

                                   POLICY STATEMENT ON

                              LICENSE APPLICATION REVIEW


I.     OVERVIEW

The objective of Days Inns Worldwide, Inc. (DIW) is to continue expansion of the Days Inn
franchise system to enable the system to compete more effectively against other lodging chains, so
long as any new locations do not have a substantial adverse impact on existing units. Although
DIW has sole decision-making authority over the granting and denial of new franchises, we wish to
be responsive to existing licensee's concerns about the potential impact of a new franchise on the
existing licensee's operation.

This Policy addresses the procedures followed by DIW upon receipt of a license application and is
for the benefit of our existing licensees only, not prospective franchise applicants, although all
franchisees within a 15 mile radius will be notified of replacement property applicants. This policy
does not apply to new franchises which DIW considers to be "replacement" facilities. A
"replacement" facility is one of similar size to a replaced location (not to exceed 120% of the size of
the replaced facility) which is projected to generate a similar number of room nights booked as a
replaced location, is in the general vicinity of the site which it is replacing and is expected to have
similar impact as the replaced property. A "replaced" location is a site which was either open as a
Days Inn facility or a site for which a Days Inn license agreement was executed but the facility was
never opened as a Days Inn and the license agreement for said site terminated effective within 24
months of DIW's receipt of a license application for the replacement facility. Also, the rights of
those facilities with contractually defined protected territories that have waived their rights under
the Impact Policy are not covered by this policy and will be governed by their contract, but those
facilities with defined protected territories that have not contractually waived their impact rights
shall retain their rights under this Policy. This Policy has been developed in conjunction with the
Impact Subcommittee of the Franchise Advisory Committee (FAC) and was approved by the FAC
on July 25, 1997.

II. NOTIFICATION OF LICENSE APPLICATIONS

Attached to this policy as Exhibit "A" is a sample Notification Letter. Upon DIW's receipt of a new
application, a letter substantially in this form is sent to all existing licensees within a fifteen (15)
mile radius of the proposed site. If there are fewer than three (3) licensees within the fifteen (15)
mile radius, the three (3) closest licensees will receive this notification.

This provision regarding notification will be in effect for all franchisees including those with
protected territories or those properties where replacement facilities are under consideration.
The sending of notification letters to the existing franchise community is the first step in the process
of reviewing license applications. In most cases these notifications are sent before our Quality
Assurance Department has inspected the applicant's facility. Therefore, notification of the receipt
of a license application is not an indication of DIW's intent to grant a franchise, but only an
indication that an application has been received.

Although the Franchise Review Committee (the "Committee") appreciates any input it obtains from
the franchise community, we are particularly interested to know if any of our existing licensees
believe that the franchising of the applicant facility will have a substantial adverse incremental
impact upon their hotel's performance. To ensure that the Committee is able to review any
comments or objections to a pending application, we ask that written responses to notification
letters be received by DIW within fifteen (15) calendar days of the date of receipt of the notification
letter.

We have attached a "Recommended Application Comment Guideline" as Exhibit B". While all
input by licensees is appreciated and thoughtfully considered, we hope that this guide will assist you
in the formulation of a response to a notification letter.

III. THE FRANCHISE REVIEW COMMITTEE

Every license application received by DIW is reviewed by the Franchise Review Committee. The
Committee considers all of the information available including, but not limited to, pictures of the
applicant facility, a punchlist of renovation items necessary for the applicant facility to meet system
standards, maps showing the location of the application in relation to existing franchises, and
written responses to notification letters. Based upon its review of all of the available information,
the Committee will either approve, deny, or table the pending application. In any event, licensees
who have responded to application notifications will be kept informed of the Committee's decision.

IV. WHAT IS "IMPACT"?

DIW considers an application to have the potential for substantial adverse impact on an existing
unit if the anticipated incremental effect of the opening of the proposed site, solely as a Days Inn
and not as any other lodging facility, is to cause:

       (A)     A reduction in the Annual Gross Room Revenue of the existing unit for any
       of the three years following the date of the notice letter by more than five percent
       (5%) of the Annual Gross Room Revenues of the unit reported during the one year
       preceding the date of the notice letter; or

       (B)     Taking into account the applicant's proposed site and all other Days Inn units
       added to the Chain after the existing unit in question, the cumulative reduction of
       annual Gross Room Revenues of the existing unit of more than seven (7%) for any
       of the three years following the projected opening date of the proposed site, more



                                                   2
       than eight percent (8%) for any of the four years following the projected opening
       date of the proposed site, or more than nine percent (9%) for any of the five years
       following the projected opening date of the proposed site.

V. INITIATING AN IMPACT STUDY

A licensee who responded to a notification letter will be kept informed of the Franchise Review
Committee's decision regarding the pending application. In the event the Committee approves the
application, an objecting licensee will be given the opportunity to commission an Impact Study, by
engaging an approved consultant, in order to support the position that the acceptance of the pending
application will have a significant impact (as previously defined) upon their revenue.

In order to initiate an Impact Study, an objecting licensee will be given five (5) business days, from
the date of receipt of notification of Committee approval, to notify DIW of its intention to
commission an Impact Study, including with such notification a check in the amount of $5,000 for
payment of the consultant's fees and expenses (payable to DIW), and a selection of one of the
approved industry consulting firms listed on Schedule A. Alternatively, an objecting franchisee
may directly engage any of the approved consulting firms to commission the study provided that the
franchisee provides DIW with proof of the engagement and a copy of the check in the amount of
$5,000 sent to the consulting firm selected within five (5) business days of notification of
Committee approval.

If the results of the Impact Study conclude that the franchising of the applicant location will impact
(as previously defined) the objecting licensee, DIW will reimburse (or refund) the $5,000 paid by
the objecting licensee, reverse the Committee decision and deny the pending application. If,
however, the Impact Study supports the decision of the Committee to approve the application, the
cost of the Study will be paid out of the $5,000 submitted by the licensee (with any excess funds to
be returned), and DIW shall be free to give final approval to the pending application.

VI. THE CONSULTING FIRMS

The list of consulting firms detailed on Schedule A has been developed by DIW in an effort to
identify those firms having the requisite qualifications and expertise necessary to perform impact
studies for the hotel industry. Most of the consultants listed are members of the International
Society of Hospitality Consultants (the "ISHC"). As stated by its President:

       "ISHC member[s] subscribe to the Society's Code of Professional Conduct. This
       code sets forth guidelines on relationships with clients, relationships with other
       consultants, and on attitudes and behavior as a professional hospitality consultant.
       The Society maintains a Committee on Professional Conduct to hear and act on any
       reports from clients of members regarding these issues."




                                                  3
We are confident that the approved consultants adhere to the highest ethical standards and will
provide us with an unbiased evaluation of the expected impact. We encourage you to contact any
of the consultants listed to discuss their qualifications, experience or references.

VII. SUMMARY

The objective of DIW is to continue to expand our franchise system in order to compete more
effectively against other lodging chains. Our commitment is to responsible growth. That is, the
addition of quality units which will have a minimum adverse impact on our existing franchises. We
have created this Policy to help promote the responsible growth of the Days Inn System while
protecting the interests of the existing franchise community. This policy is effective as of
September 8, 1997 and supersedes and replaces all prior established policies regarding license
applications.

If you have any questions regarding this Policy, please contact:

                               Richard M. Saltzman
                               Vice President, Franchise Sales & Development
                               Days Inns Worldwide, Inc.
                               6 Sylvan Way
                               Parsippany, NJ 07054
                               (973) 496-5257
                               (800) 643-2107-Fax




                                                  4
                                           EXHIBIT A




VIA OVERNIGHT COURIER


Mr. John Doe
Days Inn - USA
2400 Main Street
Your Town, NJ 00700

Re:    Pending Days Inn Franchise Application

Dear Mr. Doe:

Days Inns Worldwide, Inc. has received an application for consideration of the following property:

                       Application #:95005
                       CONVERSION (140 rooms) Comfort Inn
                       350 West Elm Street
                       Mytown, NJ 00800

Receipt of an application begins the franchise review process. The Franchise Review Committee
will examine all relevant information available before deciding to accept or reject this application.

As our Franchisee, we value your input. If you have any opinions regarding this pending franchise
application, please forward you comments to my attention within 15 days of this letter.

Thank you for your prompt attention.

Sincerely,



Vice President
Franchise Sales and Development




                                                 5
                                           EXHIBIT B



                       Recommended Application Comment Guideline


This guide is presented in order to assist in the formulation of a response to notification of a
pending franchise application. Responses are not required to follow this format. The Franchise
Review Committee will consider any and all responses which are received in a timely manner.

Response Format

A.     Brief Overview. State the application for which you are responding and the property you
       represent. Include your conclusion of potential impact.

B.     General Description of the Market. Include the distance between the properties in question,
       the differences in the location, if appropriate, and an overview of the market's lodging
       industry. Attach a map that clearly identifies the properties and points of interest including
       demand generators and destinations.

C.     Existing Property Review. Include a general description of the property, the occupancy and
       rate history, the reservation and walk-in volume, and a percentage breakdown of the market
       segments and primary demand generators.

D.     Applicant Property Review. Include a similar description and discussions of the applicant
       property's history and demand, understanding that you may not have access to much of the
       information. If the applicant property is new construction, project the demand generators
       that could be expected for the location.

E.     Impact Description. Describe how the demand generators of the different properties
       interact. How will the reservation and walk-in traffic of the existing unit be affected and
       why? Draw a conclusion about the expected changes in gross room revenues, average daily
       rate and occupancy based upon these issues.

We hope that this guide will be of use to you. Our goal is to help all franchisees understand the
application process. All input by franchisees is appreciated and thoughtfully considered.




                                                 6
                                 SCHEDULE A


DAVID E. ARNOLD

PKF CONSULTING
Eight Penn Center
  th
19 Floor
Philadelphia, PA 19103
TEL: (215) 563-5300
FAX: (215) 563-1977

PEGGY BERG

THE HIGHLAND GROUP
1111 Rosedale Drive
Atlanta, GA 30306
Email: PeggyBerg@aol.com
TEL: (404) 872-4631
FAX: (404) 872-4103

SCOTT BRUSH

BRUSH & COMPANY
            th
16410 SW 77 Court
Miami, FL 33157
Email: swbishc@aol.ccom
TEL: (305) 253-7415
FAX: (305) 251-2108

GREG HANIS

HMI
2831 N. Grandview Boulevard
Suite 209
Pewaukee (Milwaukee), WI 53072
TEL: (262)-549-1770
       (800) 657-0835
FAX: (262) 549-1964




                                     7
PAUL JINNEMAN

JINNEMAN, KENNEDY & ASSOCIATES, P.S.
6720 Fort Dent Way
Suite 120
Seattle, WA 98188
Email: Jinneman@Prodgy.com
TEL: (206) 439-6733
FAX: (206) 439-7059

DANIEL H. LESSER

CUSHMAN & WAKEFIELD
           nd
51 West 52 Street
New York, NY 10019-6178
TEL: (212) 841-7828
FAX: (212) 841-5026
Email: dlesser@cwny.cushwake.com

MARK KALLENBERGER

KALLENBERG JONES & CO.
245 Fischer Avenue
Costa Mesa, CA 92626
TEL: (714) 433-2020
FAX: (714) 433-2043

RICHARD PASTORINO

REVPAR INTERNATIONAL INC.
510 King Street, Suite 420
Alexandria, VA 22314
Email: www.revparintl.com
TEL: (703) 838-9707
FAX: (703) 838-9712

CHARLES PINKOWSKI

PINKOWSKI & COMPANY
889 Ridge Lake Boulevard
Suite 113
Memphis, TN 38120
Email: cgpishc@ix.netcom.com
TEL: (901) 684-1080
FAX: (901) 684-1085




                                   8
RACHEL J. ROGINSKY

PINNACLE ADVISORY GROUP
54-A Canal Street
Floor 3
Boston, MA 02114
Email: PinnacleMA@oal.com
TEL: (617) 722-9916
FAX: (617) 722-9917


DAVID SANGREE

US REALTY CONSULTANTS, INC.
492 South High Street
Suite 200
Columbus, OH 43215
TEL: (614) 221-9494
FAX: (614) 221-9941


STEPHEN RUSHMORE

HVS INTERNATIONAL
372 Willis Avenue
Mineola, NY 11501
Email: SXR@HVS-NY.CCMAIL.COMPUSERVE.COM
TEL: (631) 248-8828
FAX: (631) 742-3059

PETER TYSON

HORWATH HOSPITALITY CONSULTING, INC.
735 Unionville Road
Kennett Square, PA 19348
TEL: (610) 347-1800
FAX: (610) 347-1801




                               9

				
DOCUMENT INFO
Description: Sample Letter of Intent for Franchising document sample