If a Best Western Extended-Length Member resigns or is terminated, what happens to any Development Incentive they received?
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 and subsequently resigns or is terminated must repay a portion of the incentive. The amount to be repaid is calculated on a pro-rata basis, considering the time remaining in the Extended-Length Term. This applies to applications approved by the Board both before and after January 1, 2018.
For a prospective Best Western franchisee, this means that receiving a Development Incentive comes with a financial obligation that extends throughout the Extended-Length Term. If circumstances arise that lead to resignation or termination, the franchisee will not only lose the benefits of membership but will also be required to return a portion of the incentive received. This could significantly impact the franchisee's financial situation, especially if the resignation or termination occurs early in the term.
This repayment provision serves as a disincentive for franchisees to prematurely leave the Best Western system and protects Best Western's investment in the development of its properties. Franchisees should carefully consider the terms of the Extended-Length Term and the potential financial consequences of early termination before accepting a Development Incentive. Understanding this pro-rata repayment obligation is crucial for making an informed decision about joining the Best Western franchise system.