Retailing, Franchising, and Consumerism Business Intelligence in China

Super 8 Responds To Franchisee Departure In China

Super 8 Hotels in China has responded to claims made by a former franchisee that the global hotel chain owned by Wyndham Worldwide had broken agreements.

The franchisee has told local media that he was the first real franchisee for Super 8 in China and had signed a three-year exclusive agreement with Super 8 China on opening hotels in Hangzhou in 2005 in which they agreed that Super 8 must consult with him when opening a new hotel in Hangzhou. However, in April and July this year, without his knowledge, he says Super 8 reportedly opened two new hotels which were said to be too close to his own hotels, which infuriated him and resulted in his shifting to Hanting Hotels, a rival of Super 8.

As the agreement he signed with Super 8 did not cover compensation in case of infringement, the franchisee said he might not get compensated even though Super 8 violated the exclusive agreement. However, he said he had been asked by Super 8 to pay tens of thousands of yuan as he was accused of breaching the agreement by joining Hanting. He says he is preparing for a court hearing.

However, Hannah Fang, marketing manager for Super 8, says, "We did not break any legal agreements or policies which were in existence at the time the proximity complaint which affected one of his three properties. Our records show that his three properties were in violation the unit agreements. Two were in default for not abiding by our mutual agreements, and the third one had opened without our permission. We are comfortable with this outcome."

According to news reports on China Finance Online, the franchisee was among the first batch of Super 8's supporters in China. When Super 8 entered the Chinese market in 2004, he opened Hangzhou Hemei Super 8 Hotel in the same year and reportedly assisted Super 8 in opening up to six other hotels in Hangzhou.

"We already mentioned in our recent press release that we were going to be terminating several properties which did not meet our stringent brand standards. These three properties were included in that group. We appreciate what this franchisee has done to help build the brand in the Hangzhou market," says Fang. "Aside from the three properties in Hangzhou which are leaving, we have two properties open and two more opening soon in the Hangzhou market, not including our future development plans in that city. We wish the franchisee well in the future and we are making efforts to ensure a friendly goodbye. If that can’t be done, of course we will review other options."

Fang says Super 8 is now focused on building its brand, strengthening service to franchisees, and opening the chain's first group of directly managed properties.

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