If you own a franchised select-service hotel, one of the largest checks you write every month goes to Hilton or Marriott, and it arrives as a dense, multi-page invoice covering royalty fees, program fees, marketing contributions, loyalty assessments, reservation charges, and shared services. Most generalist accountants book it as a single line: “franchise fees.” That habit costs owners real money. It also hides what you’re really paying for. USALI assigns each of these charges to a different part of the P&L, so when they’re lumped together, you can’t tell whether your marketing, loyalty, and reservation costs are working for you, or compare your results cleanly against other hotels.
What is actually on that invoice
- Royalty fees: typically a percentage of gross rooms revenue, and the line everyone recognizes.
- Program and marketing fees: brand fund contributions, a separate percentage, typically calculated on the same rooms-revenue base.
- Loyalty program assessments: charges based on qualifying member-stay revenue. Reimbursements for reward (redemption) stays usually flow back separately.
- Reservation and distribution fees: charges for bookings flowing through brand channels, often per-reservation or per-room-night.
- Shared services and one-time assessments: everything from quality assurance re-inspections to technology fees and training charges.
Where errors hide
The calculation base is the first place to look. Percentage-based fees should apply to the revenue categories your franchise agreement specifies, and agreements differ. Common problems include fees calculated on revenue lines that should be excluded, loyalty assessments that do not reconcile to actual member stay activity, and shared-services charges that belong to a different property in the brand’s system or duplicate a charge from a prior month.
- Fees computed on the wrong revenue base versus your franchise agreement.
- Reward-stay reimbursements that are missing, underpaid, or don’t match the reward nights actually redeemed at the property.
- One-time charges (re-inspections, default remedies, technology rollouts) booked as recurring expenses.
- Negotiated fee reductions, such as a ramp-up in the early years of the agreement, that aren’t applied or end early.
What a proper review looks like
A monthly franchise invoice review means tying each line back to its source: your P&L revenue detail, your loyalty program reports, and the fee schedule in your franchise agreement. It takes fluency in how the brands bill, which is precisely why a generalist rarely catches anything. Over a year, the recovered amounts and corrected classifications can exceed the cost of the review itself.
If your franchise invoice currently gets a glance and a payment, it’s worth a conversation.