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Q: In your Oct. 11 Legal Briefs column, 'FAQs on the federal vaccine mandate,' you answered several questions about whether and when President Biden's vaccine mandate for federal contractors would [...]

In last week's Legal Briefs column, I covered the first steps for any travel agency owner who wants to sell their agency and retire. This week, we continue with a [...]

Q: For many years, my travel agency has had an errors and omissions insurance policy, aka an E&O policy or a professional liability policy. The premium has increased each year, [...]

Q:In the Sept. 19 Legal Briefs column, 'Travelport's 'updated' contract worth a wary read,' you pointed out some of the ways in which Travelport's new, standard contract for travel agencies [...]

Q:In your Nov. 22 Legal Briefs column, 'There's no testing option for vaccine mandate,' you predicted that the Covid vaccine mandate for all federal government contractors and subcontractors would probably [...]

Q: After 40-plus years as owner of a travel agency, I want to stop working, so I have arranged for a host agency to take over my client list and [...]

Q: I have a unique idea for a travel agency and would like advice on some of the first steps I should take. I want to get going as quickly [...]

In past Legal Briefs columns such as 'Maximizing profits will maximize an agency's selling price,' you have observed that experienced buyers of travel agencies look at cash-flow profits to determine [...]

Q: Like many travel agency owners, I obtained a Paycheck Protection Program (PPP) loan a couple of months ago. I haven't wanted to spend it all at once, so I [...]

The two most recent Legal Briefs columns covered the Cares Act programs available to travel agencies and independent contractors (ICs). Here are several follow-up questions: Q: Can I apply for [...]

Q: In last week's column ('What the Cares Act has for Travel Agencies'), you covered the parts of the Cares Act that could provide aid to travel agencies. What about [...]

Q:I'm overwhelmed by the sheer number of similar-sounding loan and grant programs in the new Cares Act. What's the best program for small and midsize travel agencies, independent contractors and [...]

Q:I know that if I buy an airline ticket on a carrier's website, there is a DOT rule that gives me the right to a full refund if I cancel [...]

Q:About four months ago, our agency signed a contract with a very large corporate account. Under the contract, we were designated as the exclusive travel management company for all of [...]

Q: You have written extensively on the subject of the legal duties of travel agencies, but what about the legal duties of OTAs? They don't typically 'advise' people who make [...]

Q: is the federal government less likely to attack independent contractor (IC) relationships these days than it was under the Obama administration? I remember that the Department of Labor had [...]

Q: I recently bought a travel agency, and I am pretty confused about ARC and Iatan. What's the difference between them, and why is my agency's ARC number the same [...]

Q: I read recently that Lufthansa sued a passenger in a German court for hidden-city ticketing, i.e., buying a ticket to a distant city (connecting through a carrier's hub) at [...]

Q: Our agency is opening a whole-sale division that will reserve large blocks of airline seats and resort hotel rooms. We plan to sell our packages through travel agencies nationwide. [...]

The Department of Transportation's new refund rules, effective as of October 28, require travel agencies to provide refunds when flights are canceled or significantly changed. The rules define the "merchant of record" as the entity responsible for processing payments, including those made by cash, check, or bank transfer. If an agency is the merchant of record, they must issue refunds even if they no longer hold the client's funds, and airlines must promptly transfer funds to the agency in such cases. Refunds must be provided within seven days for credit card sales and 20 days for other payment methods, with the option to offer credits or vouchers instead. [Extracted from the article]

Q: My host agency appears to be in severe financial trouble. They have not paid my commission splits in several months and do not return my phone calls or emails. [...]

Q: The so-called full-content agreements between the major U.S. carriers and the GDS vendors generally have five-year terms ending in about September 2011. What do you predict will happen when [...]

Q: I've been in the travel agency business since before airline deregulation, and I remember that airlines and agencies used to get fined by the government for rebating, and the [...]

Q: Several months ago, our agency entered into a new, formal contract with a major corporate client that we have been handling on a handshake basis for many years. Before [...]

According to the article, there is currently a high number of travel agency owners looking to sell and retire or work part-time. These owners are primarily aging baby boomers who entered the industry about four decades ago. The boom in travel agencies in the early 1980s was due to increased airline commissions and a decision by the Civil Aeronautics Board to allow rebating to corporate accounts. The article suggests that now is a good time to sell, as agency acquisition prices are based on past profits, which have been generally profitable in recent years. After the sale, most buyers will require the seller to stay on as an employee or independent contractor for a period of time to ensure a smooth transition. If the seller wants to continue working as an independent contractor, they may be able to do so under the buyer's agency, but they should not expect to compete with the buyer as an independent contractor for another host. [Extracted from the article]

This article discusses the complexities of setting an earnout formula when selling a travel agency. The earnout formula involves setting payments as a percentage of revenue received over a period of time. The article addresses three key questions in negotiating an earnout: what kinds of revenue are included, what clients are included, and whether the formula applies to revenue received or sales made during the earnout term. The author explains that travel agency revenue consists of various elements such as commissions, fees, overrides, markups, incentives, and miscellaneous payments, but it is rare for an earnout to include all these elements. The article emphasizes the importance of clearly defining the elements of revenue included in the purchase agreement and ensuring that the buyer provides a detailed report of each sale and revenue item. [Extracted from the article]

This article provides guidance for individuals interested in acquiring travel agencies. It highlights five industry-specific issues that attorneys representing buyers may not be familiar with. These issues include the need for approval from the Airlines Reporting Corp. for ownership changes, the potential loss of bonus commissions if the timing of the acquisition is not managed correctly, the importance of checking client and supplier receivables, the varying commission payment policies of travel suppliers, and the need for precise definitions in earnout agreements. The article emphasizes the importance of understanding these issues to avoid potential legal mistakes in travel agency acquisitions. [Extracted from the article]

This article discusses the accreditation numbers required for travel agencies and host agencies. ARC numbers are needed for agencies that want to issue airline tickets, while Iatan numbers, CLIA membership, or TRUE codes are industry-recognized accreditation numbers that allow suppliers to recognize agencies and track their sales. Iatan appointments have the most requirements and are recognized by all travel suppliers. CLIA member numbers are recognized by cruise lines and some tour operators and resorts, while TRUE codes are recognized by many suppliers. The article also mentions that the U.S. Travel Insurance Association offers centralized training for travel advisors. [Extracted from the article]

According to an article in Travel Weekly, retail travel agencies can sell travel insurance without a license in most states, as long as they meet certain conditions. These conditions include selling under the supervision of a state-licensed travel insurance agency or broker, undergoing training on insurance offerings and sales practices, and not providing advice or interpreting policy terms. Travel retailers can take applications and forward them to producers for decision, but they cannot answer clients' questions about the policy and must refer them to the producer. It is important for travel agencies to be aware of these rules when selling travel insurance. [Extracted from the article]

This article provides six tips for travel agencies to negotiate the best deal with Global Distribution System (GDS) vendors. The author suggests starting the negotiation process early, being patient, and not being afraid to let the current contract expire while negotiating. It is also recommended to compare notes with colleagues and seek expert advice to determine the best financial deal rather than being swayed by technology. Additionally, creating a credible threat of conversion by obtaining competing offers can strengthen the negotiating position. The article emphasizes the importance of maintaining confidentiality if there is a nondisclosure agreement with the vendor. [Extracted from the article]

The Federal Trade Commission (FTC) has adopted a rule that will make non-compete clauses illegal starting on September 4. This rule will have a significant impact on businesses in the U.S., including travel agencies. It means that travel agencies can no longer have clauses in employment or independent contractor agreements that prohibit employees or contractors from working with competitors after their relationship with the agency ends. The rule supersedes all state laws that allow non-compete clauses, even if they are limited in time and geography. However, the rule does not prohibit non-compete clauses that apply during employment or the contractor relationship. There are exceptions for senior executives making over $151,164 and for buyers of businesses requiring non-compete agreements as part of the sale. [Extracted from the article]

This article discusses six ways that travel agencies can obtain higher commissions. These methods include joining a host agency or consortium, using travel companies' booking portals, partnering with higher-commission travel agencies, designating your agency as an authorized location under a GDS contract, becoming an associate branch of a larger agency, or forming a group of agencies designated as branches under an ARC agreement. These arrangements are designed to make suppliers believe that the agency is part of a larger entity, simplifying marketing and administration. The article suggests that suppliers may condone or encourage these arrangements as they require fewer resources to reach a larger number of agencies. [Extracted from the article]

This article discusses the importance of clear and comprehensive clauses in host agency contracts. It highlights several "green flags" that indicate a fair agreement, such as including all forms of travel agency revenue in the revenue split, specifying how compensation is calculated for groups, outlining the requirements for compensation to accrue, setting fixed deadlines for payment, listing any costs the independent contractor (IC) must pay, providing the right to audit the host's books, addressing the collection of unpaid commissions, determining the fate of commissions after contract termination, and outlining the terms and conditions for moving bookings to another host agency. While not every well-drafted host contract includes all of these clauses, most of them do. [Extracted from the article]

This article provides guidance for travel agency owners who are considering selling their businesses. The author distinguishes between "travel people" who are experts in advising clients but may lack a strong understanding of the business side of their agency, and "business people" who have a better grasp of the economics. The first step for a travel person is to ensure they understand their company's financials and can answer questions about them from prospective buyers. The article also suggests ways to maximize profits, such as joining a consortium or cutting expenses, and provides advice on finding a buyer and retaining an experienced attorney. The author emphasizes that they are not patronizing travel people, as they would likely be one themselves if they owned an agency. [Extracted from the article]

Q: My corporation owes the bank about $100,000. If I want to sell my travel agency, will that debt reduce the value of my agency by $100,0007 What if the […]

Q: In a column last year titled "Hiring a business appraiser usually not worth the expense," you sharply criticized professional business appraisers' efforts to evaluate travel agencies. How, then, should […]

Q: To drum up more cruise bookings, my agency is thinking about marketing cruises in several creative ways, such as advertising discounts below published rates, offering to cancel and rebook […]

Q: My agency often receives airline debit memos for tickets that were auto-priced by our GDS system. Auto-pricing occurs when we simply choose a fare displayed by the system for […]

Q: Many cities seem to be suing all the leading online travel agencies, including Expedia, Orbitz, Travelocity, Priceline, and Hotels.com, to collect hotel taxes on the gross amounts paid by […]

Q: Our agency has always retained several older travel agents with their own leisure clientele. We have always classified these agents as independent contractors, as we do not control their […]

Mark Pestronk is a Washington-based attorney specializing in travel law. His Legal Briefs column appears regularly in Travel Weekly. Q: I am contemplating putting the stock ownership of my travel […]

Q: If I hire a business-appraisal company, can the appraiser really give me a good idea of how much my travel agency is worth? How much would I pay for […]

Q: Except for three European airlines' small ownership stakes in Amadeus, not a single one of the GDSs has any airline ownership. Does this mean that the Department of Transportation […]

Q: I am trying to educate my local attorney about the travel agency business so that he can successfully defend my agency in a client lawsuit. Can you suggest any […]

Q: All of the GDS vendors' top executives have recently predicted that the GDS financial model is going to change radically in the next few years. This means that the […]

Mark Pestronk is a Washington-based attorney specializing in travel law. His Legal Briefs column appears regularly in Travel Weekly. Q: Several times over the past 20 years, you have written […]

Corporate travel agencies are facing challenges in keeping their contracts up to date with the evolving demands of their corporate clients. As corporate travel management becomes more sophisticated, clients are requesting new services that are not covered by existing contracts, without being willing to pay additional fees. To address this issue, agencies can review their current contracts and propose amendments to cover new services and fees. Another approach is to propose a blanket amendment for all corporate accounts, stating that new services will come with new fees. However, if a contract promises unlimited services for a fixed fee, agencies may be stuck unless they can terminate the contract. It is advisable for new contracts to include a clause explicitly stating that new services will have separate fees. [Extracted from the article]

This article discusses the risks associated with selling a travel agency and receiving payment through an earnout agreement, where the buyer pays a percentage of the agency's revenue over a specified period. The author suggests two types of protections that can be included in the agreement to minimize risks. The first type, called "earnout protections," includes setting a floor on the amount the buyer pays, regardless of revenue decline, and placing limits on the buyer's discretion to make decisions that could lower revenue. The second type, called "default protections," includes provisions such as interest for late payments, personal guarantees from the buyer's owner or parent company, the right to repossess the agency in case of default, pledging buyer's assets, requiring a standby letter of credit, or placing future installments in escrow. The author notes that while floors are rare, limits on buyer's discretion are common, and it is ideal to have both types of protections. [Extracted from the article]

Adventure or expedition travel is becoming increasingly popular, but it is important for travel agencies to understand the legal implications and protections involved. While tour operators typically have waivers that cover themselves and their agents, it is not always guaranteed that the agency will be protected. Laws regarding waivers vary from state to state, and some states may not uphold waivers of negligence. Therefore, it is recommended for travel agencies to have their own disclaimer for adventure trips, specifying that they are not responsible for any incidents that may occur. It is also important for the agency to clearly indicate the operator's name on the itinerary to avoid any liability issues. [Extracted from the article]