2017 Franchise Disclosure Document Updates
U.S. Only | As we finalize Marriott’s annual Franchise Disclosure Document (FDD) updates, we want to highlight certain system changes that may impact your hotel(s). These changes are effective for all new development and relicensing deals as of March 31, 2017.
- Relicensing Application Fee Increase for Full Service Brands
Effective March 31, 2017, the Relicensing Application Fees for full service brands will increase to the greater of $150,000 or $500 per guestroom. For transactions that have not yet closed but for which we have received completed applications (including payment of the application fee), we will honor the previously agreed-upon relicensing application fee. For transactions for which we have previously received a request for an application but have not received the completed application, we will charge the 2016 application fee provided that we receive the completed application (including payment of the application fee) within sixty (60) days of our sending the 2017 FDD. For all other transactions, the new fee will apply. - Royalty Fee Increase for TownePlace Suites
Royalty fees will remain constant across full service brands, as well as for all Marriott Select Brands with the exception of TPS, which will increase from 5% of GRS to 5.5% of GRS for new transactions and relicensings effective Jan. 1, 2018. - Development Incentive
Fairfield Inn & Suites, SpringHill Suites and TownePlace Suites will continue to offer a development incentive for new applications. Effective March 31, 2017, for any signed franchise agreement for any of these brands, a franchisee will pay a 3% royalty fee in Year 1, 4% in Year 2 and the current royalty fee at time of signing from Year 3 to the end of the term. - Non-Compliance Fee for All Brands
In order to protect brand health, a new non-compliance fee will be introduced to Marriott brand hotels with franchise agreements signed after March 31, 2017. This fee (1% of gross room sales (GRS) per month) will be charged to hotels that fail to comply with the franchise agreement. Note: former Starwood-branded hotels are already subject to such a non-compliance fee. - Brand Standards Audit (BSA) Fee for All Brands
Hotels will continue receive one BSA each year (AC and Autograph Collection Hotels will receive two audits per year), and we reserve the right to conduct unannounced re-audits if your hotel receives a Red BSA score. The cost of the BSA ranges from $1,300 to $3,000 per audit and re-audit, depending on the brand. This fee is now applicable to former Starwood brands as well. - Global Design Fees
Marriott’s Global Design team is your resource within Marriott as you design, build, and renovate your hotels. The team provides many value-adding products and services, including the recent launch of the Lobo platform, which provides all design guidelines, enables collaboration and document sharing, and creates a project record and design documents archive that can be referenced for the life of a hotel. To learn more about the Global Design team and available services, click here for an overview.
To continue to support your design, new build and renovation projects, beginning March 31, 2017, the Global Design fees will be updated as follows.
New Build
Full service hotels with franchise agreements signed after March 31, 2017 will pay a design and construction review services fee of $50,000.
The design and construction review services fee for Marriott Select Brand (MSB) hotels with franchise agreements signed after March 31, 2017 will vary based on the type of project, as follows:
|
Type of MSB Project |
Amount |
|
Prototypical |
No Charge |
|
Modified prototypical building or décor |
$5,000 |
|
Custom (all – building and décor), including dual-branded |
$30,000 |
Full Service Hotel Renovations
Full service hotels will be inspected after the required renovation completion date to verify satisfactory completion of the renovation, for a fee of $20,000. Note: MSB hotels will not incur renovation fees.
Additional Fees
|
|
MSB |
FS |
|
PIP |
$10,000* |
$20,000* |
|
Failed Audit |
$5,000 |
$10,000 |
|
Failure to Timely Complete PIP/Renovation |
$5,000 |
$5,000 |
|
Use of an Unapproved Designer |
No Charge |
$50,000 |
*There may be an additional $5,000 charge if you request for Marriott to complete a PIP on an expedited basis.
New Initiatives and Operating Costs
As you are aware, we are in a time of transition and are working to harmonize platforms across the Marriott and former Starwood brands. We anticipate that the integration process will result in the merger of the Marriott and former Starwood loyalty programs. In addition, for former Starwood brands, we anticipate that the integration process will result in a transition to the MARSHA reservation system and other Marriott technology platforms (including Marriott’s designated POS systems, sales and catering systems, communications support systems, and intranet site (MGS)), CTAC, the Marriott Global Quality program, and the Marriott training model. The timing for implementation of changes will vary. We will communicate these changes to you as our plans to integrate and harmonize systems are finalized and costs are determined.
We thank you for your continued support as we remain committed to protecting your investments while continuing to improve each brand’s economic business model.
