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Holiday Inn, a division of Inter-Continental Hotels Group PLC, recently terminated 700 Holiday Inn franchise channel members

Economics Aug 06, 2020

Holiday Inn, a division of Inter-Continental Hotels Group PLC, recently terminated 700 Holiday Inn franchise channel members. According to Holiday Inn, these channel members failed to meet Holliday Inn’s minimum standards. Over the years, the channel members did not make regular renovations and they were not willing to make the necessary investments in upgrades, such as new bedding, bathroom fixtures and other improvements, that would help to position Holiday Inn as a more upscale chain of hotels. Many of the channel members felt that they had been loyal and productive channel members. They questioned the fairness of Holiday Inn’s negative evaluation of their performance.

Do you think Holiday Inn’s termination of so many channel members was “fair”? Discuss from the point of view of the franchisor (Holiday Inn) and the franchisees (channel members). 

Expert Solution

The evaluation or justification of the decision of Holiday Inn's to officially terminate 700 Holiday Inn franchise channel members is practically subject to the proper circumstantial contingencies that led to such situation and the legal scrutiny of the same to establish or nullify the organizational decision accordingly. In this instance, as claimed by the Hliday Inn management or administration, the concerned franchise channel members have been blatantly unable to meet the stipulated qualitative and operational standards and in support of its claim the company states that the franchise member channels have failed to keep up with the necessary qualitative upgrades and improvements. Now, from the point of view or perspective of the franchisor or the Holiday Inn, considering that the company management has legitimately detected any violation of its stipulated qualitative and operational standards through appropriate and absolutely fair or transparent audits and inspections of the franchise channels accompanied by the analysis and presentation of the official audit and inspection reports, such decision would perhaps be regarded as valid or equitable. On the other hand, if the proper and appropriate audit and evaluation procedures have not been followed by the franchisor or the company administration and the franchise channels have been terminated illegitimately without any valid and presentable evidence or evaluation, then it is reasonably obvious that such decision on behalf of the franchisor management cannot be legally validated and the franchise channels have the legal right or prerogative to challenge the concerned decision in the court of law. Therefore, from the point of view or perspective of the franchise channel members or the franchisee it is legally valid or justifiable to challenge the decision undertaken by the company management as long as proper and legitimate reports or evidence of the violations of the qualitative and operational standards and specifications have not been officially or publicly disseminated by the company management or administration. In such circumstance or scenario, the channel members can undertake any legal action officially challenging the concerned decision by the franchisor on grounds of moral inequality and unfairness. However, if the company management has appropriately and adequately conducted all the necessary qualitative audits and inspections of the franchisee channel members and officially presented all the relevant reports and evaluations to support or justify its decision, then it would not be legally justifiable for the channel members to challenge it at least on grounds of procedural unfairness, inequity, or any intentional manipulation.

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