Please paraphrase to reduce the pl@giarism in the content. In…
Question Answered step-by-step Please paraphrase to reduce the pl@giarism in the content. In… Please paraphrase to reduce the pl@giarism in the content.In research from Abell (n.d.) Franchising has a long history in the hotel sector and has been used extensively in certain parts of the world since the early 1950s. Agency theory refers to the access franchising provides to highly skilled and incentivized management. Research shows that franchising improves managerial performance by establishing a community of interest that incentivizes managers to work hard. Given that hotel development is a capital-intensive business, flagship brands are keener than ever to license their name to an existing property or seek investment from outside companies to develop properties.They receive a percentage of revenue from the franchisee and can avoid hefty up-front costs. They can also tap into their partners’ familiarity with local market dynamics, which is especially important when a brand is expanding its geographic footprint to new regions, says Guichardo. There are perks for franchisees, who get to own a property with brand recognition, receive actual money, and access global reservation systems and loyalty programs. The advantages to the property owner are those stated as follows:The owner retains the property, providing possession and creating residual value when the lease term expires.The financial risk to the owner is minimized, mainly if the hotel company is creditworthy and has guaranteed a minimum rent. (Elgin, 2010; Yu, 1999). The owner has no operational responsibilities. (Rushmore, 2002; Xiao, O’Neill, and Wang, 2008).The disadvantages of the property owner are inclusive of the following stated disadvantages:The operator has little incentive to maintain the property in top condition as the lease nears its expiration date.Henceforth, many hotels are returned to the owners in the poor physical condition and with a trained reputation. In addition, because much of the existing business is often diverted to other hotels managed by the operator, few reservations are on the books for the owner or new tenant. If the hotel is highly successful, the property owner does not participate in the financial rewards to the extent of an owner/operator. Thus, the profit potential is somewhat limited. (Rushmore, 2002; Wickford, 2012).Leases are difficult to terminate. Unlike a management contract, an agency agreement, a lease creates an encumbrance on the real estate that gives the tenant-specific rights of possession. (Rushmore, 2002). Arts & Humanities Writing ENGLISH 130 Share QuestionEmailCopy link Comments (0)
