If a Best Western Extended-Length Member received a Development Incentive, what additional payment obligation exists upon termination, regardless of when the application was approved by the Board?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
As further defined in Best Western Bylaws Article II, and as set forth in the applicable Membership Agreement, Members and Members with Conditions that resign or are cancelled/terminated shall pay to Best Western:
- A. For applications approved by the Board prior to January 1, 2018, (i) all fees, dues and charges for the remainder of the applicable term; and (ii) the cost of all goods and services provided by or ordered through Best Western for which payment has not yet been received.Additionally, an Extended-Length Member that received a Development Incentive shall pay to Best Western a prorata amount of the Development Incentive based upon the length of time remaining in the Extended-Length Term.
- B. For applications approved by the Board after January 1, 2018, (i) all fees, dues, and charges as detailed in the Membership Agreement; and (ii) the cost of all goods and services provided by or ordered through Best Western for which payment has not yet been received. Additionally, an Extended-Length Member that received a Development Incentive shall pay to Best Western a prorata amount of the Development Incentive based upon the length of time remaining in the Extended- Length Term.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, an Extended-Length Member who received a Development Incentive faces an additional payment obligation upon termination. This obligation is a pro-rata amount of the Development Incentive, calculated based on the length of time remaining in the Extended-Length Term. This requirement applies regardless of whether the Board approved the membership application before or after January 1, 2018.
This means that if a Best Western franchisee with an extended-length agreement and a development incentive decides to terminate their agreement early, or if Best Western terminates the agreement, the franchisee will have to repay a portion of the incentive they received. The amount they repay is directly proportional to how much time is left on their extended-length term. For example, if half of the term remains, they would need to repay half of the development incentive.
This provision serves as a disincentive for early termination and protects Best Western's investment in the franchisee's development. Prospective franchisees should carefully consider the length of the extended-length term and the implications of the development incentive, as early termination could result in a significant financial obligation to repay part of the incentive. It is important to fully understand the terms and conditions related to the Development Incentive and Extended-Length Term before entering into a franchise agreement with Best Western.