Whoever said franchising in China was easy? Well, in truth, no-one –
not least Super 8 Hotels. As China’s budget hotel sector experiences
exponential demand growth, foreign and Chinese economy chains are using
franchising as the fastest means of diversifying their hotel portfolios
across China. Inevitably, most are facing up to huge problems in
implementing standardised levels of service, branding and staff
training across different markets in this vast nation.
Super 8, however, has run into different troubles. It has been forced
to respond to claims made by a former franchisee that the global hotel
chain – owned by Wyndham Worldwide – had broken contractual agreements.
The franchisee told local media that he was the first Chinese
franchisee for Super 8, and signed a three-year exclusive agreement
with Super 8 China upon opening hotels in Hangzhou in 2005. He says
Super 8 agreed to consult with him should it seek to open more new
hotels in Hangzhou. However, he claims that in Spring this year, Super
8 opened two new hotels without his knowledge, both of which were too
close to his own hotels. Infuriated, he signed up with Hanting Hotels,
a rival of Super 8.
As the agreement he signed with Super 8 did not cover compensation for
infringement, the franchisee argues that he may not be compensated even
though, in his view, Super 8 violated the exclusive agreement. However,
the franchisee says he has been asked by Super 8 to pay tens of
thousands of yuan for breaching his agreement with the company by
joining Hanting. He says he is preparing for a court hearing.
Super 8 says it did not break any legal agreements or policies, “which
were in existence at the time the proximity complaint,” and counters
that two of the former franchisee’s properties were in default for “not
abiding by mutual agreements,” and that the third one had opened
“without our permission.” We suspect this one may run and run.
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