Accor Sells French Hotels

Accor SA, which runs Sofitel, Motel6, Novotel and 12 other hotel brands in 90 countries, will sell 158 of its hotelF1 properties in France to a group of institutional investors for $402 million. The deal will allow Accor to reduce its debt by roughly $277 million in 2009, much of which will be added to the group’s cash reserves. Accor will lease the hotels and their 12,300 rooms for 12 years, renewable six times, with variable rents based on an average 20 percent of revenue.

Dollar Thrifty Updates

Dollar Thrifty Automotive Group has closed about 115 corporate-owned locations of its Dollar Rent A Car and Thrifty Car Rental brands in the U.S. and Canada, and about 10 more locations will be closed through the end of the year as their leases expire. The company says the closed locations "did not meet minimum returns on asset and profitability hurdles," and that they comprised about 4 percent of 2008 rental revenue. In addition to the closures, Dollar Thrifty re-franchised 11 of its corporate-owned U.S. locations in the last year.

IFA Supports Veterans’ Bill

The IFA is mobilizing a grassroots e-mail campaign for the Help Veterans Own Franchises Act, introduced last June by Congressmen Aaron Schock (R-Ill.) and Leonard Boswell (D-Iowa). The bill, which the IFA helped prepare and has been asking Congress to co-sponsor, would give tax credits up to $25,000 per unit to franchises that offer veterans discounts on initial franchise fees. It was inspired by incentives to hire veterans in this spring’s stimulus bill, and complements the IFA’s VetFran program, which has helped 1,500 veterans gain entry into franchising since its creation in 2002. David French of the IFA says the bill will have "a positive impact on veterans’ participation in franchising," and that it is a low-cost way to put people in business and create jobs.

Netsolace and MSA Working Together

Netsolace, a franchise-oriented software company, and Michael H. Seid & Associates (MSA), a franchise advisory firm, have formed a strategic alliance. Tariq Farid, founder of Netsolace and CEO of Edible Arrangements, said the two companies have worked together in the past to develop nXstep, a software program that provides training for all levels of a franchise system and eliminates the need to travel for that purpose. Through the alliance, Netsolace and MSA will recommend each other’s services to their clients, and Netsolace will assist in making MSA’s existing franchise manuals and training programs interactive. In related news, Edible Arrangements has chosen Direct Capital, a national direct lender, as its finance company with an expanded lending program, which will be used for single and multi-unit development of new stores, store remodels and equipment purchases. The Direct Capital program, in conjunction with Farid Capital—a secondary source set up by Tariq and Kamran Farid—will provide finance options to franchisees who do not meet the underwriting criteria of the DCC program.

PhaseNext Brings Smashburger to Airports

PhaseNext Hospitality, a venture by restaurant-industry veteran Roz Mallet and Amy O’Neil, has signed on to open Smashburger in seven major U.S. airports—including Dallas/Ft. Worth; Houston’s George Bush Intercontinental; and Washington, D.C.’s Ronald Reagan National—over the next year. Mallet, PhaseNext’s CEO, is also treasurer of the National Restaurant Association and is the former president and interim CEO of Caribou Coffee. Mallet and O’Neil hope to expand PhaseNext’s portfolio of fast-casual brands from an initial count of four to 10 or 12 over the next five years, and will operate in locations like airports, train stations, military bases and university campuses. 

Jury Rules Against FranCorp

FranCorp, which bills itself as the country’s oldest and largest franchise consulting firm, was found by a Miami jury to have engaged in fraud and unfair and deceptive trade practices and to have conspired with South Beach Franchising LLC—a FranCorp client—to defraud four groups of franchise purchasers, who lost their total investments as a result. The jury found that FranCorp helped South Beach in establishing a franchise system selling health, nutritional, fitness and beauty products; preparing false and misleading legal documents; and selling that franchise system to four groups of plaintiffs, who were awarded the combined total of $365,000 they lost by the jury. The plaintiffs will also recover their attorney’s fees, which could be an additional six-figure sum. FranCorp’s founder and president, Donald Boroian, was also found liable. "The jury’s decision sends a clear message to FranCorp and other franchise ‘packaging houses’ that they will be held accountable for the preparation of false and misleading franchise documents for their clients and that they cannot engage in the unauthorized practice of law," said Robert M. Einhorn, lead trial counsel for the plaintiffs. FranCorp has worked with McDonald’s, Pizzeria Uno, Nathan’s Famous Hot Dogs, Friendly’s Ice Cream, Church’s Chicken and Holiday Inn.

Appalachian Underwriters Creates Franchise and Affinity Division

AUI has formed a new Franchise and Affinity Division, to be led by Steve Shelton. This new division will work directly with franchisors, associations, and affinity groups to create endorsed insurance products that meet the specific needs of their members. AUI Franchise and Affinity will have access to the large base of products currently offered by AUI, but will also have the latitude to create new products for specific franchise and association groups. While this division will work directly with the franchisor to develop the appropriate products, these products will be delivered through retail agents, allowing franchisees the security of an endorsed product and the comfort of dealing with their hometown insurance agent.

Hardee’s Franchise Units Sold

Star Asset Development has purchased 27 Hardee’s restaurants and 13 other properties in Illinois, Iowa and Missouri. Terms of the deal were not disclosed. Star is a large, multi-unit CKE franchisee led by Buddy Brown and Steve Rosenfeld. Shree Krishna Foods, the seller, contracted with National Franchise Sales in May to broker the sale of the restaurants. The deal attracted multiple offers and GE Capital provided the financing.

Blockbuster Franchisee Acquired

Flicker Management Company, a 19-unit Blockbuster Entertainment franchisee based in Memphis, Tennessee, which has been operated by Joel L. Brown, has been acquired by BBV Holdings LLC. Brown will stay on with the new company. Atlanta-based Advanced Restaurant Sales facilitated the deal.