What is Best Western's policy regarding leases with an initial term of 12 months or less?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
- (A) Except as provided in Article II, Section 7(B) of these Bylaws, a Membership shall automatically terminate on the date of the occurrence of any one of the following events:
- (1) The Best Western Property is leased or subleased;
- (2) A lease of the Best Western Property terminates;
- (3) If the Best Western Property is not leased, a change occurs of 50% or more of the equitable ownership of the Best Western Property within a 12-month period;
- (4) A change occurs of 50% or more of the equitable ownership of a leasehold interest within a 12-month period;
- (5) If the Best Western Property is not leased, a change occurs of 50% or more of the equitable ownership of the entity or entities owning the Best Western Property within a 12-month period;
- (6) A change occurs of 50% or more of the equitable ownership of the entity or entities leasing the Best Western Property within a 12-month period.
- (7) A term or condition is not met, after the Board, having provided the Member with an opportunity for a hearing, has found grounds exist for cancellation of the Membership and the Member has been granted a conditional extension in lieu of cancellation.
- (8) A Member or Member with Conditions fails to maintain and provide proof of insurance coverage as required by the Rules and Regulations.
- (9) A term or condition is not met by a Member whose Membership Application was approved by the Board with specific requirements and time frames for compliance prior to final approval of the Membership and has been advised that failure to meet any of these requirements will be grounds for automatic cancellation.
Except for the events specified in Paragraphs (A)(7), (8) and (9) of this Article II, Section 7, a Member may request an opportunity to be heard by submitting to the Board, in writing, at least 30 days prior to the effective date of the occurrence, the reasons,
in specific detail, why the automatic termination provisions are inapplicable and the termination should not occur. The Board in its sole discretion may request the Member appear in person and provide oral testimony. The Board shall have sole discretion to determine whether an event of automatic termination will or has occurred.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
Based on the 2025 Best Western FDD, a Best Western membership will automatically terminate if the Best Western property is leased or subleased, or if a lease of the Best Western property terminates. Additionally, if the Best Western property is not leased, a change of 50% or more of the equitable ownership of the Best Western Property within a 12-month period will also result in automatic termination of the membership. The same applies if a change occurs of 50% or more of the equitable ownership of a leasehold interest within a 12-month period.
This policy has significant implications for potential Best Western franchisees who plan to lease their property. If the lease term is short, or if there are frequent changes in ownership, the franchisee risks automatic termination of their Best Western membership. This could lead to a loss of brand recognition, reservation systems, and other benefits associated with the Best Western brand.
Prospective franchisees should carefully consider the terms of their lease agreement and the stability of the property ownership before committing to a Best Western franchise. It is crucial to ensure that the lease term is long enough to provide sufficient time to operate the franchise and recoup the initial investment. Additionally, franchisees should be aware of any potential changes in ownership that could trigger the automatic termination clause.
It's important to note that the Best Western Board has the discretion to determine whether an event of automatic termination will occur. A member can request a hearing with the Board to argue why the termination provisions should not apply, but the Board's decision is final. Therefore, franchisees should maintain open communication with Best Western and seek clarification on any potential issues that could arise from their lease agreement or property ownership structure.