Choice Hotels International (CHH) has disclosed a new risk, in the Sales & Marketing category.
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Choice Hotels International faces a significant business risk due to the potential termination, renegotiation, or expiration of its franchise agreements with independent third parties. These contracts, typically ranging from ten to thirty years, include provisions allowing for termination upon certain anniversaries based on specific circumstances and hotel brands. The termination of these agreements can lead to liquidated damages that are often less than the fees otherwise receivable, and the company may struggle to replace or renegotiate these deals on favorable terms. Additionally, if a small group of franchisees holds a substantial number of contracts, particularly within one brand, the risk of simultaneous terminations could severely impact revenue and brand representation.
The average CHH stock price target is $140.50, implying -7.74% downside potential.
To learn more about Choice Hotels International’s risk factors, click here.
