D68/100FDD 2025
Aloft Hotels — Litigation & Risk
Lodging - Hotels & Motels · FDD Items 3, 4 & 5
Elevated Risk
17 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
17
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
68 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.0M
Avg loan size
$1.0M
Participating lenders
1
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Maryland
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01MEDMassive capital requirement ($13.3M-$36.2M) with no disclosed net income data to validate ROI
- 02MINORAnemic unit growth of only 2.5% YoY suggests market saturation or franchisee dissatisfaction in 166-unit system
- 03HIGHOngoing 2018 Starwood data breach litigation creates reputational risk and potential liability exposure for franchisees
- 04MINORNo protected territory means direct competition from other Aloft franchisees and Marriott brands in same market
- 05MINOR5.5% royalty on gross room sales is owed regardless of profitability, creating cash flow pressure during downturns
- 06MINORMultiple class-action lawsuits and antitrust investigations indicate systemic franchisor governance issues
- 07MINORAbsence of Item 19 (financial performance representations) prevents validation of $107.73M average revenue claim
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.