Franchised Sales: Guide for Selling a Franchised Hotel

There are several differences in the processes of selling a hotel that is franchised and selling an independent property. There are several more parties involved in the selling of a franchised property, so special considerations are necessary. Let’s look at some of these differences.

Notify the Franchisor

With an independent property, you likely don’t have anyone to answer to. You won’t have to share the information about the sale with anyone if you don’t want to. If you have a franchised property, you’re part of a bigger whole. Therefore, you’ll have to notify your franchisor when you’re getting ready to sell. This way they know that a new owner will be integrating into their business. At this time, you should also be requesting a new owner PIP for prospective buyers to review.  

Review Third-Party Requirements

There are quite a few things you need to prepare when selling a hotel – especially with a franchised property. You need to have copies of all your operating licenses, leases, and service agreements. You should also list and value all capital improvements you’ve made in the past three years. Once you have the basic documentation, it’s time to start preparing your financial statements.

Financial Records

You’ll need to provide your financial records for the buyer’s review and for them to present to their lender. Your financial records should consist of at least three years of profit and loss statements. You should also include a three-year breakdown of financial statistics, including annual revenue, occupancy, and average daily rate. This should also include a breakdown of your revenue sources, such as transient, contracted rates, group bookings, etc. Along with the three-year breakdown, include a month-to-month report of the last full year-to-date. Include a three-year statement of your income tax returns as well. If a STAR report is available for the last year-end, provide this too.

Some other financial information sellers sometimes forget when selling a hotel are personal expenses that are included in your profit and loss statements which a new buyer would not assume. If your financial statements include other business interests, make sure to provide a written statement detailing which expenses will not convey with the sale. Be comprehensive with the information you provide for potential buyers.

Selling a Hotel Through Southeast International Hotel Brokers

Selling a hotel, whether franchised or independent, can be arduous and time-consuming. Let Southeast International Hotel Brokers ease some of the burdens. We help you navigate through every step of selling a hotel, and we connect you with our vast network of buyers. Contact us today to see how we can help you.