Under what circumstances regarding financial ownership interest in a Best Western property will the monthly fees be 3.5% of property room revenue?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
- (C) The Board shall establish Monthly Fees designed to cover the cost of providing services to Members. Monthly Fees for Members approved by the Board on or after January 1, 2018, shall be as determined by the Board annually, prior to the following fiscal year; however, if a Member has or Members collectively have a minimum of a fifty percent (50%) financial ownership interest in the Applicant Best Western Property at the time of the Board's application approval, the Monthly Fees shall be three and one-half percent (3 ½%) of Property Room Revenue. For the purpose of an Applicant being eligible for a Monthly Fee of three and one-half percent (3 ½%) of Property Room Revenue, the Members or Members must have each and all been a Member as of July 1, 2016.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to the 2025 Best Western Franchise Disclosure Document, the monthly fees for a Best Western property can be 3.5% of the property's room revenue under specific conditions related to financial ownership. This reduced monthly fee applies if a member or a group of members collectively hold a minimum of 50% financial ownership interest in the Best Western property at the time the Board approves the application. This condition is designed to potentially incentivize significant financial commitment from existing members in new Best Western properties.
To qualify for this reduced monthly fee, all members contributing to the 50% ownership stake must have been members of Best Western as of July 1, 2016. This requirement suggests that Best Western aims to reward long-standing members who invest in new properties, rather than extending the benefit to newer members or external investors. The stipulation ensures that the reduced fee is tied to the loyalty and tenure of its existing members.
This arrangement could be highly beneficial for existing Best Western members looking to expand their investment within the brand. By maintaining a significant ownership stake, they can reduce their monthly fees, potentially increasing profitability. However, prospective franchisees should verify all current requirements with Best Western to ensure eligibility and understand any additional conditions that may apply. This information is crucial for accurately forecasting expenses and returns on investment.