Topics in Hotel Law, Mgmt & Franch

Branding & IP.

Faculty: Hank Teegarden

https://media.wcl.american.edu/Mediasite/Play/1c7f5c7a13664771a9b10d22164102011d

trademarks, as well as other intellectual property rights such as patents, copyrights and trade secrets which contribute to the brand image.
Picture a hospitality venue and think about all of the IP elements you see (and smell and hear) – logo, reservation system, menu descriptions, décor, architecture, software, signature scent, training manuals.
IP (and IP indemnification) will be a part of almost every hospitality contract – from software licenses to franchise agreements to marketing and publicity.

Part 2, Copyright

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Copyright is the body of laws which grants protection for their literary, artistic, and other creations, which are generally referred to as “works”.
Copyright Act of 1976 covers all works created on or after January 1, 1978 – introduced copyright attaching on creation rather than publication and notice – extends to (17 U.S.C. 102) “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device”
Copyright Act of 1976 durations: (i) individual: life plus 70 years; (ii) joint works: longest life plus 70 years; (iii) works for hire: 95 years from first publication or 120 years from creation
Every work registered or first published in the U.S. before 1925 is in the public domain.

Part 3, Trademarks

https://media.wcl.american.edu/Mediasite/Play/5d7b737ad8414892b26554ffd67ee3fd1d

Trademarks (products), service marks (services), and trade dress (total appearance and image in the marketplace)
State, federal, and non-U.S. registrations are available for marks
Common law protection is also available in the U.S. – there can be strategic reasons for going that route, but registration carries many benefits.
Categories of marks: generic, descriptive, suggestive, arbitrary or fanciful.
Important to impress on clients that trademark needs to be an integral part of the branding process from the very beginning.
USPTO application process – intent-to-use and actual use applications.
It is both important and legally necessary to police marks both internally and externally.
Non-traditional marks – color, motion, scent, sound, hashtags, and usernames.
Trade dress can be registered. The USPTO will look at (1) functionality and (2) distinctiveness. It is ideal to use designs that are not dictated solely by function and that have distinctive elements.

Part 4, Patents

https://media.wcl.american.edu/Mediasite/Play/5d7b737ad8414892b26554ffd67ee3fd1d

In 2011, the U.S. moved away from a purely first-to-invent system for patents.
The basic concept for patents in the U.S. is that they must be novel, useful, and nonobvious.
In a hospitality context, one of the most common patentable categories includes reservation systems, other business systems, and software. The availability of these patents, especially software and business method patents, has been curtailed by the combination of Alice Corp. v. CLS Bank International, 573 U.S. 208 (U.S. 2014) and Mayo v. Prometheus, 566 U.S. 66 (U.S. 2012).
Design patents cover non-functional, ornamental designs and are an often-overlooked element of IP portfolios.

Part 5, Trade Secrets & Conclusion

https://media.wcl.american.edu/Mediasite/Play/a161cff4fc5a4f76bbcd8d8dc42bc21a1d

Trade secrets can be seen as a complement to patent protection. Whereas getting a patent usually requires the publication of a detailed and enabling disclosure and a limited term of protection, trade secrets, by nature, remain private, and protection can go on forever. However, there is a constant need to maintain secrecy and no protection against independent discovery.
Careful consideration is required when deciding between the patent or trade secret route.
Social media as a developing area that has implications for all areas of IP – invention disclosures, embedded links, use of a person’s name or likeness.
Especially in the hospitality industry, one must exercise a great deal of caution when interacting with consumers on review sites such as Yelp or Travel Advisor.

Assignment.

Essential Elements of Franchising.

Faculty: Harris Chernow, Chris Wallace & Steve Goldman

https://media.wcl.american.edu/Mediasite/Play/25817af288964c589b2c1d02645d90f41d

https://media.wcl.american.edu/Mediasite/Play/25ca5aa5c3cd4048bd984fb306d0c1091d

https://media.wcl.american.edu/Mediasite/Play/a349dcb231814662b99577ec07224e4d1d &

https://media.wcl.american.edu/Mediasite/Play/a349dcb231814662b99577ec07224e4d1d

https://media.wcl.american.edu/Mediasite/Play/7d8e13ee1590454c81e1df32ac2c3cde1d

https://media.wcl.american.edu/Mediasite/Play/fb81fda87df84c0f9c705c9c5122bb081d

Franchisee Point of View.

Faculty: Harris Chernow & Steve Goldman

Part 1, Background

https://media.wcl.american.edu/Mediasite/Play/507cea64258b4432b57c3a09eea0f6f91d

Common franchise terms
Franchise concept
Laws & regulations
FDD
Franchise Agreements
Management Agreements

Part 2, Franchisor Relationship

https://media.wcl.american.edu/Mediasite/Play/64f4b56a09804c10ba9ecabd08bd784c1d

Part 3, Franchisor & Franchisee Point of View

https://media.wcl.american.edu/Mediasite/Play/16debfaac5774c76afb04fb0d6f349581d

Franchisor

https://media.wcl.american.edu/Mediasite/Play/6695794bb5b245ea8f3bde69a9bd57801d

Part 5, Related Documents

https://media.wcl.american.edu/Mediasite/Play/8b83f1ab516f4e53b2d77d00d6c3312f1d

Guarantees
Confidentiality
Financing

Part 6, COVID-19 Challenges

https://media.wcl.american.edu/Mediasite/Play/37ec2d84daa9430b82c2a2d19bc235d51d

Changes in behavior
Forecast

Assignment

Trade Associations.

Faculty: Rachel Humphrey & Chirag Shah

Part 1, Purpose of Trade Associations

https://media.wcl.american.edu/Mediasite/Play/0b390734ebe4432aac513627c7d7af4e1d

(volunteers)

https://media.wcl.american.edu/Mediasite/Play/a2be65cd99c14a5c8975f57c76ee01231d

Advocacy & government affairs at federal, state, and local
Brand relationships
Membership
Vendor relationships

Part 3, Advocacy

https://media.wcl.american.edu/Mediasite/Play/ee803684b6b44e1fac405620043da52f1d

Federal, state, county, city, including agencies
Workforce relations
Human trafficking
Tax reform
Litigation
COVID-19

Assignment

Live Session, Non-Traditional Careers.

Faculty: Bill Tennis & Amy King
Paths to take for non-traditional career
Roles for the attorney

Management Agreements & Brand Managed Properties

Management Agreements & Brand Managed Properties.

Faculty: Michael Shindler & Samantha Ahuja

Part 1, Overview

https://media.wcl.american.edu/Mediasite/Play/6a1a6d71c4d141f997f67ae03eb1a3aa1d

Discussion of the parties involved
Operating business nature of a hotel
Agency concept
Differences between branded and third-party management agreements

Part 2, Letter of Intent & Term Sheet

https://media.wcl.american.edu/Mediasite/Play/399a223ac1b446349f215a71bd7ab3b11d

Before Hotel Management Agreement is LOI

https://media.wcl.american.edu/Mediasite/Play/21b2570dbdcb41f9a89a781aac0724f91d

The Process

https://media.wcl.american.edu/Mediasite/Play/2e89a47758914823bcfbf34962d733781d

Term, Renewability, Basis for Renewal
Fees
Basic
Incentive
Technical Services
Reimbursements
Accounting Methodology & the Uniform System
Indemnification
Functions, duties, responsibilities, and degree of control
Owner-Manager relationship issues
Budget
COVID Discussion

Part 5, Terms and Conditions of the Hotel Management Agreement

https://media.wcl.american.edu/Mediasite/Play/9e7a018b579b4fc29f1e666c785d69701d

Asset manager
Termination provisions
Performance standard
Owner right to transfer
Area of protection, non-compete, and territorial exclusivity
Manager capital
Ownership of guest data

Part 6, Role of the Lender

https://media.wcl.american.edu/Mediasite/Play/3f4ecfef46d14d85be45f94d315e2b111d

Subordination, Non-Disturbance & Attornment Agreement
Comfort letters
Remedies for defaults

Assignment.

Bankruptcy.

Faculty: Emil Hirsch

Part 1, Current State of Hotel Financial Distress

https://media.wcl.american.edu/Mediasite/Play/40446ee7aaa645eca444910c006f62931d

Plummeting occupancy, RevPAR, and income
Loans that may be in arrears
Franchise fees and obligations (like PIP) that can’t be supported with cash flow
Strategies to work with the lender
Strategies to work with the brands
What can a hotel owner hope to get with workout agreements (time, discounts)
What if the market stays down and revenue doesn’t return and what if the lenders and brands refuse to negotiate?

Part 2, Protections and Advantages of Chapter 11 Bankruptcy

https://media.wcl.american.edu/Mediasite/Play/232faa745be54e9d88cd5beae8cb758c1d

The ability to sell encumbered assets (outside the ordinary course of business) free and clear of liens and claims.
The ability to reject onerous leases and executory contracts.
The ability of the owners of the debtor entity to operate it as Debtor – In Possession.
The ability to use the cash collateral of a secured lender consisting of room, food and beverage revenue to operate in Chapter 11.
The Debtor’s 120-day (or longer if extended by court order) exclusive period to propose a plan of reorganization.
The ability to propose a Chapter 11 plan consisting of full liquidation of the Debtor, a reorganization and continued operation of the Debtor or a hybrid consisting of partial liquidation and continued operation of the Debtor

Part 3, The Plan of Reorganization Offers the Following Potential Benefits

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ability to extend the maturity date for secured debt
ability to propose different interest rate on secured debt than the contract rebate
ability to reject onerous leases and executory contracts.
the dilution or cancellation of the equity holders
the replacement of management
the issuance of new equity securities pursuant to the Plan
the substantive consolidation of the Debtor with related entities
reducing secured debt to the value of the collateral securing it and paying the resulting deficiency as an unsecured claim
payment of unsecured claims to general creditors on a discounted and deferred basis
a class of creditors or equity holders so long as one impaired class votes to accept.

Part 4, The Ability to Incur New Secured Debt with Priming Lien to Secure It.

https://media.wcl.american.edu/Mediasite/Play/c14c90192ce5482fa13ef7869c122e431d

Super-priority loan

Disadvantages and Pitfalls of Chapter 11 Filing

https://media.wcl.american.edu/Mediasite/Play/e0ececc6a4b64b2baa2b0dc1f25def041d

Loss of ownership interests and control
Loss of right to operate as Debtor-In-Possession
After the exclusive period of the Debtor to file a plan expires, any creditor or equity holder can propose one
Cannot revive an executory contract or lease which expired or was fully terminated pre-petition
It will result in full liquidation of the Debtor if the court denies authorization to use a secured creditor’s cash collateral.
A debtor without cash to operate and more than break-even occupancy going forward will not be able to successfully organize.

Part 6, Receivership and Conclusion

https://media.wcl.american.edu/Mediasite/Play/8bb33a37d6744136a025ed9d32f2539b1d

Assignment.

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