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Radisson Strips Exit Penalty From Franchise Pacts

LAS VEGAS-Radisson Hotels & Resorts levels the playing field between franchiser and franchisee by eliminating monetary penalties for canceled pacts. The upfront cost will be more, but Radisson's betting the change will keep people in the system.

By Maria Wood | Updated on February 19, 2002

LAS VEGAS-Radisson Hotels & Resorts Tuesday announced it is altering franchise agreements to allow franchisees the freedom to opt out of contracts at any time with no monetary penalties.

The change came about after hotel consultant Stephen Rushmore, Mineola, NY-based president of HVS International, reviewed the changed franchise agreements. He told a group of Radisson franchisees gathered in Las Vegas for the annual business conference of Carlson Hospitality Worldwide, Radisson’s parent company, that all major hotel chains demand liquidated damages when a licensee decides to terminate the contract. Those penalties can average three times the amount of fees the franchise company collects from the franchisee during the previous 12 months.

Rushmore said the new provision amounts to “satisfaction guaranteed” on the part of Radisson. It gives the franchisee the ability to leave the chain without penalty, but it also “keeps Radisson focused on keeping its franchisees happy,” Rushmore said.

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