What constitutes a conflicting interest for a Best Western Director that requires disclosure?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 4. Duty to Disclose Every Personal Conflict of Interest to the Corporation
- (A) A Director is required to make prompt and full disclosure to the Board of any conflicting interest, either direct or indirect, he or she has or may have in a transaction to which the Corporation is or may be a party. The disclosure shall include all facts known to the Director that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction.
- (B) A conflicting interest includes, without limitation, any interest the Director has in the transaction if it is of such financial significance that it would reasonably be expected to exert an influence on the Director's judgment if he or she were called on to vote on the transaction.
- (C) A Director shall not vote on or participate in discussions or deliberations on matters when a conflict is deemed to exist other than to present factual information or to respond to questions presented.
- (D) A Director who discloses a conflict or potential conflict shall request that the disclosure be recorded in the minutes of the meeting.
- (E) A Director shall assure that the minutes properly record his or her abstention on any votes on matters for which a conflict may exist.
- (F) A Director may vote on an issue that benefits the Director if the issue is one that is decided for the general good of the Corporation and the Members. An example is voting to replace signage. If the motion is to replace all signs for all Members, a Director may vote. If the motion is to replace signs only on the Director's property, it would be improper for that Director to vote.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, a Director must promptly disclose any conflicting interest, whether direct or indirect, that they have or may have in a transaction involving the Corporation. This disclosure should include all facts known to the Director that a reasonably prudent person would consider material when deciding whether to proceed with the transaction.
A conflicting interest includes any interest the Director has in a transaction if it is of such financial significance that it would reasonably be expected to exert an influence on the Director's judgment if he or she were called on to vote on the transaction. When a conflict is deemed to exist, the Director cannot vote on or participate in discussions or deliberations on the matter, except to present factual information or answer questions. The Director must also request that the disclosure be recorded in the meeting minutes and ensure that their abstention on any votes related to the conflict is properly recorded.
However, a Director may vote on an issue that benefits them if the issue is decided for the general good of Best Western and its Members. For example, a Director can vote to replace signage for all Members, but cannot vote if the motion is to replace signs only on the Director's property. These rules ensure that Directors act in the best interests of the Corporation and avoid using their position for personal gain.