Toronto Hotel Lawyers Advising Clients on Property Improvement Plans

Most franchised hotel brands will require a prospective hotel franchisee to implement a Property Improvement Plan, also known as a PIP, as a condition of receiving a license or franchise to operate under the brand. PIPs are required at various stages of a hotel’s life cycle, including a change of ownership, relicensing, and at regular renovation cycle intervals.

At Baker & Company, our hotel lawyers advise franchisees with respect to how best to meet their obligations as franchisees, including how to comply with PIP’s. With our help, you can plan for the future of your venture, including preparing for pending capital improvements and replacements, while running a successful operation.

Unique Challenges with Hotel Property Improvement Plans 

Amenities that make a hotel attractive and successful (i.e. décor, linens, carpeting, bathrooms, etc.) all have a defined lifespan and require replacement from time to time. However, hotels operate 24 hours a day, 365 days a year, creating unique pressures on hotel operators, including keeping the property in pristine condition while perpetually in use.

A typical PIP may require upgrades to certain amenities on a designated schedule and may also require the franchisee to set aside a certain percentage of annual revenues in a fund to pay for improvements and replacements during the lifespan of the license agreement. Depending on the size of the hotel, this can be a significant amount of money and run into the millions of dollars, thus representing a significant financial liability.

The above, coupled with the challenges of renovating or otherwise doing work on an operational hotel, means that complying with obligations under a PIP can be challenging and requires guidance from a lawyer with significant knowledge on such matters.

Common Elements of Hotel Property Improvement Plans 

A PIP is required to bring a hotel in compliance with brand standards. Common elements often include:

• Exterior and physical structure upgrades and repairs;
• Furniture, fixture, and equipment changes;
• Amenity upgrades;
• Accessibility for Ontarians with Disabilities Act (AODA) and other legislative compliance; and
• Safety improvements.

Baker & Company: Representing Hotel Franchisees Throughout Ontario 

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter. We rely on our broad base of experience and expertise to provide exceptional legal guidance. Call us at 416-777-0100 or contact us online for a consultation.