KINDER, GENTLER FRANCHISING

Aberdeen, SD may seem to be an unlikely incubator for new hotel brands, but the small Midwest city is the birthplace of two chains: the decades-old and now-massive Super 8 and the year-old Settle Inns franchise system. The two flags share more than just an original home.

Several former Super 8 employees were among the founders of the seven-unit limited-service Settle Inns chain. While the first property is nearly 15 years old, new ownership recently launched a licensing program that harkens back to Super 8's days as a family-oriented chain.

“We feel the time is right for a new limited-service chain,” says Brendan Watters, CEO and co-founder. “The approach we're taking, however, is one that goes back to the basics of franchising.”

The chain's franchise practices and agreement have already earned it special recognition from the American Association of Franchisees and Dealers. Settle Inns recently received a 99.3-percent rating, the highest ever, on AAFD's Fair Franchising Standards scale.

Settle Inns' license agreement is for 10 years with five-year extensions. Franchisees get a guaranteed area of protection and can leave the brand after 24 months — with 12-months' notice — without liquidated damage penalties. Total franchise fees are 5.25 percent in the first year and 5.75 percent thereafter. If in any month a franchise property drops below 50-percent occupancy, royalty fees decrease by one-half percent. Also, a licensee can leave the system (with 60 days notice) if occupancy fails to top 50 percent for a year.

“Our back-to-basics approach emphasizes simplicity,” says Terry Kline, senior VP of development. “We believe franchisees should be allowed to be true entrepreneurs and manage their businesses as they see fit.”

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© 2014 Penton Media Inc.


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