Ascend Hotel Collection: Litigation & Risk
Lodging · FDD Items 3, 4 & 5
Elevated Risk
7 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 7
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 84 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 32
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $95.3M
- Avg loan size
- $3.0M
- Participating lenders
- 16
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
- 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
- MD
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
3 pending matters: (1) Norma Knuth class action in Canada re destination marketing fees; (2) Jai Sai Baba multi-plaintiff RICO/franchise law suit (stayed, in arbitration); (3) T&T Management breach of contract/data misappropriation. Resolved: Wydredge (settled 2014), Sender Kohl ($85K settlement 2021), Highmark Lodging ($779K judgment against Choice 2024), Dahya Investments (mixed award). Large volume of 2023 royalty collection arbitrations by franchisor against franchisees.
What drove the 84/100 verdict
Risk Score Breakdown
- 01MINORMinimal system growth (1.7% YoY) with only 177 units suggests stagnation or contraction pressure
- 02MINORMultiple active class action lawsuits regarding destination marketing fees and discriminatory practices indicate systemic franchisor issues affecting profitability
- 03MINOR61 recovery actions initiated by franchisor in prior year suggests widespread franchisee defaults, payment disputes, or breach claims
- 04MINORNo Item 19 financial performance disclosure (Avg Revenue/Net Income not provided) prevents validation of unit economics
- 05MINORUnprotected territory exposes franchisees to direct brand competition and canibalization within same market
- 06MINORWide investment range ($187K–$11.8M) with unclear cost structure creates pricing opacity and unpredictable capital requirements
- 07MINOR5% royalty on gross room revenue (not net) penalizes franchisees during low-occupancy periods common in hospitality
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.