The Pitfall of Franchising.

NEWS RELEASE

P.T. Qualita Indah has been the Master Franchisor in Indonesia for Choice Hotels International ((Clarion, Quality, Comfort, Sleep) for the last sixteen (16) years. Despite all odds including close down of all other Choice Master Franchisees throughout the Asia region by 1998, shut down of Choice sales office in Singapore, 12 years of lack of support and lack of visits to Indonesia from any Choice Management USA, the Asian financial crisis, and numerous natural disasters in Indonesia and the surrounding region, P.T. Qualita Indah has successfully built up the Choice brands in Indonesia to 31 hotels (14 hotels in operation and 17 under development).

In accordance with the MFA (Master Franchise Agreement) PT Qualita Indah has continuously requested for support and semi-annual visits from Choice USA. In 2006, P.T. Qualita Indah asserted claims against Choice in an arbitration proceeding in the United States. P.T. Qualita Indah asserts, among other things, that Choice breached the Master Franchise Agreement by failing to support P.T. Qualita Indah’s operations, failing to deliver promised business to Franchised Hotels, failing to deliver marketing plans and support, failing to support the Indonesian region, failing to provide a reservation system that worked, and failing to timely approve new franchisees.

In January 2007, Choice retaliated by announcing that it was terminating the Master Franchise Agreement with P.T. Qualita Indah. P.T. Qualita Indah has now added claims in the arbitration proceeding that Choice has wrongfully terminated the Master Franchise Agreement. The arbitration hearing for these claims is scheduled for October 16-19, 2007 in Washington, D.C.

Karl Waelti, CEO PT Qualita Indah, stated: “We purchased the master development rights for Choice Hotel Brands in Indonesia based on Choice’s statements and plans to be a major Hotel Player in the region as well as their promise to support franchisees. The reality is over the years we have paid Choice over 700k in fees and Choice is totally oblivious of the circumstances that exist in any of our Choice Branded Hotels and the present management has a complete disregard for past commitments. The facts speak for themselves, we are the only Master Franchisees in Asia that were able to attract and support franchises to join the system still operating. Choice’s lackluster performance to develop the Asian region and deliver sufficient room nights are reasons behind all Asian franchisees (including conglomerate Hong Leong Group) that have bought the development rights such as Malaysia, Singapore, Thailand, Hong Kong, and New Zealand, quitting the Choice Franchise system with disappointment years ago. For more questions contact Karl Waelti email karlwaelti@ehotelier.com
Cell : 081 195 6405.