Mark Pestronk
Mark Pestronk

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 existing bookings in return for a small percentage of future commissions. I am now left with my ARC appointment and my GDS contract. I understand that I can get out of the GDS contract by showing that I have ceased operating and haven't sold my agency. As for my ARC appointment, instead of just giving it up, I have been considering an offer from someone who wants to buy it. Is it possible to sell the appointment? Do you think that there is any risk in selling it?

A: Literally speaking, you cannot sell an ARC appointment, as the appointment is not an asset but rather merely an agreement between your agency and ARC. 

Nevertheless, you can accept money for cooperating with the ARC change-of-ownership procedure that will assign the ARC agreement to another entity, which will then have the right to use your ARC number. 

For simplicity, let's call the other entity the "buyer." Unless you trust the buyer with your checkbook and future happiness, you should wait until ARC approves the change of ownership before you allow the buyer to make reservations, issue tickets, file sales reports, change the designated bank account or remit any net proceeds to ARC.

The huge risk here is that if you turn any such control over to the buyer prior to ARC approval, the buyer could issue lots of tickets and not pay for them or pay with fraudulent credit cards. As far as ARC is concerned, your agency is liable for the debt. 

It makes no difference if the parties already have applied for ARC approval but have not yet obtained it. The pendency of the application means nothing to ARC.

Based on my experience, I would also advise you to wait until ARC approval before accepting reservation requests from the buyer unless, again, you trust the buyer with your checkbook and happiness. For all you know, the buyer may be making unauthorized credit card charges, and the airlines and ARC will hold you responsible.

Further, if ARC sees that your ARC appointment is involved in a pattern of fraudulent activity, ARC will not only hold your agency corporation or limited liability company responsible but will also try to come after you personally. ARC believes that these facts constitute fraud by the agency owner, and that fraud constitutes grounds for personal liability for the owner of a corporation or LLC.

Finally, before you even agree to a deal allowing you to wait until ARC approval of the change of ownership, you need to find out why the buyer doesn't want to apply for a new agency appointment in his or her own name, rather than doing a change-of-ownership. The two kinds of ARC applications are 90% the same, and it takes ARC about the same amount of time to process them, so the buyer's rationale is worth examining.

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