A traveler driving along Interstate 36 stops at two different hotels on successi

Question

A traveler driving along Interstate 36 stops at two different hotels on successive evenings. Explain, and differentiate between, the signs posted by the front desk in terms of the text discussion about ownership, management, franchising, and joint ventures.

Hotel A: This Hampton Inn is owned by Jerome J. Vallen and Sons, Inc., under license from Promus Richfield Hotel Management.

Hotel B: This Hampton Inn is owned by Promus, Jerome J. Vallen, General Manager.

Hotel A, which is owned (ownership is what the text identifies as "one party to the deal") by the Vallen family, is managed by Richfield Management Company (another party to the deal), but flies the flag, the logo, and utilizes the reservation system of the franchiser, Promus Hotels (still another party to the deal).

Hotel B is a much simpler structure. Promus Hotels is the owner, using its own identification and logo and managing the property itself, having hired Vallen as the general manager to do that managing job. Vallen is an employee of Promus.

Explanation / Answer

Ownership:

Ownership is when a company has authority and control over the enterprise and having to dictate it's operations and functioning. Ownership can be acquired by either starting a business, taking a franchise or acquisition of a business. In the above case of Hotel B is in complete ownership of Promus and Vallen is the manager there

Management:

Management is arrangement in which the owner company, vests its operations to another company, which performs necessary managerial function in return of fees. In the Hotel A case, Promus Richfield is the licencer and it manages the Hotel under Vallen Family.

Franchising:

Franchise is given by the franchiser to franchisee, the franchiser here gives a product or a service with complete assistance for its products to the franchisee who inturn gives them a fees for it. From the above example of Hotel A Vallen Family is the franchisee and Pormus is the Franchiser.

Joint Venture:

It is when 2 or more enterprises come together to run a business together with shared authority and responsibility of the functioning and operations of the business.

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