  We propose a set of boundary terms for higher spin theories in AdS$_3$ that
lead to a well-defined variational principle compatible with Dirichlet boundary
conditions for the metric and higher spin fields. These boundary terms are
valid for higher spin theories in the Fefferman-Graham gauge and they allow us
to compute the canonical free energy of higher spin black holes directly from
the Euclidean, covariant, on-shell action. Using these results we reproduce the
thermodynamics of the higher spin black hole of Ammon, Gutperle, Kraus, and
Perlmutter and comment on the corresponding theory of induced $\cal{W}$-gravity
at the boundary.
