DISCLAIMER: The opinions and comments of individual franchisees expressed herein are solely the opinions of those individual franchisees and do not necessarily state or reflect the opinions of the Owners 8 Association or its attorneys. The information in this website is the sole property of the Owners 8 Association and any duplication or reprint cannot be made without the consent of Owners 8 Association.
An independent association of North American Wyndham Hotel Group franchisees www.O8A.org
Updated March 9, 2010
MEMBERSHIP NEWS:
1,353 O8A MEMBERS FROM ALL WYNDHAM HOTEL GROUP BRANDS
We continue to welcome all Wyndham franchisees to join the association. Working together we will accomplish our goals. It is essential that we create an exceptional working relationship between the franchisees and Wyndham where both groups with prosper. Continue to join the association and spread awareness of the group to your colleagues. Registration is always free and your support of our issues and concerns is always welcomed. The Owners 8 Association (O8A) is the voice of Wyndham owners, an outspoken advocate, and an indispensable resource for the hotel owners of these franchising systems. We are the unified voice that collectively represents the Owners and their issues.
The O8A identifies the most significant issues facing the owners and focuses on objectives and tactical initiatives needed to serve the members and create a group where owners can operate cooperatively. The Association keeps members informed regarding laws, regulations, industry trends, and trade news through communication. The O8A informs members about continuous changes in franchise requirements and also provides members with an overview of hotel owners top concerns. O8A identifies key issues and develops action items that are specific to the franchisees / Owners.
O8A has helped bring about the following positive changes for the membership:
1. Best Rate Guarantee: As of April 1, 2009, WHG has changed the BRG from giving guests a free room to discounting the room rate by an additional 10%. Many franchisees were loosing extensive amounts due to the BRG and O8A and several other franchisees through communication have helped bring about this change.
2. Wyndham Rewards Enrollment: Mr. Danziger announced that WHG will no longer make guests opt out of the WR registration but rather make them decide to opt into signing up for WR. Many of our over 7 Million WR members were auto enrolled and many without their knowledge. Further, we continue to pay 5% for fees when the guests are proactively matched through our PMS. Currently, WHG has less than 10 percent of the email addresses of these members and WHG is loosing the ability to cost effectively reach these folks.
3. Communication: WHG has announced improvements to their customer service with the franchisees. They have reduced the number of contacts in an effort to get answers to us quickly. They wish to respond to you within 24 hours. As franchisees, we have continually addressed this problem as we were continually ignored and never received answers.
4. QA: We have over the last year and a half brought to WHG's attention the fact that many of the inspectors were inconsistent and in some cases were unprofessional in conducting their inspections. WHG has announced that they have created a QA self inspection video to help us prepare for the inspections. More importantly, they have focused on making the inspection process more consultative in nature. 5. Customer Service: One of the improvements to that O8A had requested involved allowing the franchisees to open a file and create a response in advance of a guest calling in or emailing an issue to Customer Service. WHG will now let the franchisees access MyPortal and create a file with the guests names and issues with a response thus giving the guest an immediate answer rather than having to following the standard procedures which may take days.
6. QA inspections have begun to be announced in terms of the property is given an update that they will be inspected within a few weeks. This allows properties to be better prepared for any inspection. Although, we would like all properties to be guest ready 100 percent of the time.
7. QA doubling of points has been brought to an end. It is our understanding that the QA inspectors will no longer double points on follow up issues however, will only remove the deductions after they are completed. This had been a major issue of the franchisees as in many cases the follow up points and the doubling of these points had resulted in QA failures that could not be justified.
We bring to your attention once again that franchisees are currently experiencing extreme financial difficulty due to the economic slowdown. Most recent data from the experts suggests that a major shift in the current pattern will not take place until sometime next year. In 2009 things started going bad, any savings in 2008 were used to keep afloat in the winter of 2009. While we still had debt coming into spring 2009, summer 2009 did not cover debt from winter 2008 let alone provide savings for winter 2009. Now in 2010, people are being foreclosed on, lending has dried up, most families do not have extra cash to help stay afloat and many are going month to month with no salary and are taking on many of the responsibilities themselves.
As owners we have all been cutting back, terminating employees and taking those jobs ourselves, making our operations far more streamlined then ever before. It is unfortunate that this upgrade is being completed now and it is regrettable that WHG is demanding such a considerable capital expenditure during a time when no increases in revenue are being foreseen. Based on this, many of us have requested postponement of this upgrade until such time in the future that a mutually and financially agreed upon solution is available. WHG has offered to make this transition smoother by offering loans, postponing payments and suggesting that the software is cheaper than other franchisors. Further, the PCI compliance deadline has become a major driving force behind requiring this upgrade completion right now. In terms of addressing the cost, there have been numerous communications already sent by O8A which addressed the costs as well as the impact of increased payments on the franchisees. Also, PCI compliance is a significant issue, however; there are avenues that can be taken to overcome this hurdle during this current economy. Again, we have pointed out some information on this in prior letters. The major component that affects us is the fact that the franchisor will abandon support of the software thus creating the compliance issue. Again, there are ways to rectify this process through extensions and modifications to the software.
We hope you plan of giving serious consideration to the information presented in this letter and our prior communications. Our attorney has been in communication with your attorney Mr. Spalty however; there has not been any new dialogue with WHG. We continue to hope that you are willing to address these issues in an amicable manner as our success leads to your success and working together towards these results has always been our goal. Should you wish to discuss these issues further please contact our attorney Mahesh Patel or speak with us directly.
SOUIX FALLS, SD – Last Wednesday District Judge Lawrence L. Piersol ruled that Wyndham Worldwide, parent to Super 8 Motels, Inc., breached its contract with 160 franchisees when it set an unauthorized mandatory fee of five percent on gross room sales in 2003.The lawsuit was certified as a class action in October 2007 after Bird Hotel Corp., a Super 8 operator out of Winnipeg, Manitoba, challenged the chain’s TripRewards program, claiming the new fee was not part of their contracts. Although Wyndham had filed an appeal of the 2007 decision in the 8th US Circuit Court of Appeals, its was denied.
Regarding last weeks ruling, Scott Abdallah of Johnson, Heidepriem & Abdallah, one of the attorneys representing the franchisee plaintiffs said, “Our clients are obviously very pleased with the judge’s recent decision. We had argued that this was a straightforward breach of contract and the court agreed.” His partner Ronald Parsons, Jr. presented the arguments at the hearing in favor of their motion for summary judgment and against Super 8’s argument. The judge ruled that the amount of damages that Wyndham must pay to the franchise owners will be decided by a 12-person jury. Franchise owners are seeking the money they paid into the customer-incentive program which amounts to approximately $3.5 million plus pre-judgment interest. Although a trial date has been set for April 13, 2010, Judge Piersol has ordered the parties to mediation on March 15.
Wyndham touts its TripRewards lodging loyalty program as the world’s largest with 5.2 million active members which drives 26 percent of room sales. Today Wyndham has more than 7,000 hotels in 66 countries. Super 8, one of the largest chains of budget motels in the world, was started in Aberdeen, South Dakota in 1974, and has over 2,000 motels in North America. Super 8 does not have a CEO or board of directors nor does it have any assets. Its president reports directly to the CEO of Wyndham. Will this decision have any implication on other Wyndham franchisees or other hotel chains franchise owners?
Abdallah explained, “Our class action involves a relatively small class of Super 8 franchisees still governed by an original South Dakota standard franchise agreement that does not allow for some of the changes that are made within the industry today. As a result, it is hard to say what type of wide-ranging impact this decision will have on other franchisees.” According to the franchisees’ brief in support of summary judgment filed last October, Bird Hotel Corp. and other plaintiff franchisees had franchise agreements that were executed between 1984 to 1991 and were for a 20-year term. All were required to pay a four percent royalty fee and two percent advertising fee on gross room sales on a monthly basis. The brief states, “The franchise agreements authorize the imposition of no other recurring fees during their term of twenty years.”
A Souix Falls Business Journal article stated that Judge Piersol told the attorneys at the hearing, “You should be able, I’d think, to mediate it out. If not, I’ll see you the 13th of April.” Wyndham attorneys argued that the company didn’t breach its contract when it instituted the mandatory fee for the customer-rewards program. They stated that franchisees are required to do a number of things, such as provide breakfast, replace carpeting and make improvements. They insist that part of being a franchisee is to pay a fee for a rewards program. They also argued that there should be no award for damages because they have benefited by the TripRewards program through increased numbers of customers. Lead attorney for Wyndham defendants Edward Spalty of Armstrong Teasdale declined to make comment. Wyndham Worldwide’s media relations did not return telephone calls or emails prior to publishing.
PATEL & ASSOCIATES Attorneys Obtain Assistance with legal issues with you franchisor CONTACT: MAHESH PATEL 301 S. Central Expressway, Richardson, TX
75080 Tel. : (972) 643-1813 Fax : (972) 231-0104 E-mail: mpatel@patellaw.net WWW.PATELLAW.NET
GIAMBRONE & SALTZMAN, LLC Attorneys Obtain Assistance with all hospitality law issues including legal issues with your franchisor by experienced hotel franchise attorneys
CONTACT: RICHARD SALTZMAN 710 Rt. 46 East, Fairfield, New Jersey 07004
Tel. : (862) 210-8137 Fax : (973) 227-6616 E-mail: rs@giambronesaltzman.com
Daily News for Franchise & Small Biz Owners 
Hotel News and Tools - Hotel Interactive Network www.hotelinteractive.com
