Hi sf-
Although one of the hotel chains I worked for DID have a frequent stay program, it was not point-based like HHonors or Priority Club, etc. It was based on number of stays and nights and you could not redeem for free nights - once you reached a certain level you were entitled to upgrades, late checkouts, etc.
So, unfortunately I don't have any first hand experience with this topic.
I would assume that if it is a franchised hotel chain there would have to be some sort of reimbursement, as opposed to a corporate chain where all the money goes to the same place - eventually. That's just a guess. Please chime in if anyone knows more about this. Great question, I'm interested to find out the answer myself!