Dive Brief:
- A hotel franchising bill that passed New Jersey’s General Assembly in May failed to get a hearing in the state’s Senate on Monday.
- The bill would have forbidden franchisors from mandating franchisees purchase goods and services through a specific vendor, as well as required franchisors to disclose when they received commissions or rebates on franchisee purchases. It also would have forbidden hotel brands from selling loyalty points for profit without “reasonable compensation” for hotel owners.
- Though it had support from some hospitality industry players, the bill stalled in the Senate after pushback from the American Hotel & Lodging Association, which claimed it would have limited franchisors’ ability to enforce brand standards. The bill’s supporters, meanwhile, claimed it would put the franchisor-franchisee relationship on more equal ground.
Dive Insight:
In a statement Tuesday, AHLA President and CEO Chip Rogers said New Jersey legislators “made the right choice.”
“The legislation would have severely limited hotels’ ability to enforce the quality, service, and safety guidelines guests know and trust. In doing so, it would have destroyed the hotel industry’s franchise model – a beacon of success that has created millions of jobs and helped thousands of Americans realize the dream of owning their own business,” he added.
The International Franchise Association had also condemned the bill. In a statement in May upon the bill’s passage in the general assembly, IFA Vice President of State Government Relations Jeff Hanscom said, “Today New Jersey legislators voted against locally owned businesses in favor of government overreach, which will undoubtedly harm the state’s hospitality industry.”
The Asian American Hotel Owners Association, however, had a different stance. A statement from last year said the bill “would ensure greater fairness in the system and strengthen protections for franchise businesses.”
AAHOA President and CEO Laura Lee Blake previously told Hotel Dive that the bill would push back against the increasing amount of “surprise fees” franchisees were seeing, as well as ensure hotel owners shared in the profits hotel companies were making from hotel loyalty points sales.
AHLA pushback has helped to stall other potential hotel laws and regulations in recent months, most notably in Los Angeles, where city officials scrapped a union-sponsored ordinance that would require area hotels to house people experiencing homelessness alongside regular guests.
