B62/100FDD 2024
Comfort — Litigation & Risk
Lodging - Hotels & Motels · FDD Items 3, 4 & 5
Elevated Risk
83 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
83
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
62 / 100
FranchiseVerdict composite
Rating
MODERATE
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
624
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
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
Maryland
State whose law governs disputes — relevant if you're not based there
What drove the 62/100 rating
Risk Score Breakdown
- 01MINORStagnant unit growth (0.5% YoY) indicates a mature or declining system with minimal expansion momentum
- 02MEDNo Item 19 financial disclosure (Avg Net Income not disclosed) prevents validation of $67,470 average revenue claims and actual profitability
- 03HIGHAggressive litigation history: 75 franchisor-initiated collection actions in 2023 alone, plus pending class action in Canada regarding undisclosed fees—suggests systemic payment issues and franchisor-franchisee tension
- 04MINORWide investment range ($319K–$12.1M) with no protected territory creates unpredictable ROI and cannibalization risk
- 05HIGHPending class action litigation over undisclosed destination marketing fees indicates potential hidden costs beyond stated 6% royalty
- 06MINORChoice Hotels' anti-competitive practice disputes raise concerns about franchisor's operational fairness and legal compliance
- 07MINORHigh royalty rate (6% of gross, not net) combined with no profitability data creates cash flow risk in low-margin 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.