Econo Lodge Franchise Cost & 2024 FDD Data
54/100
Second tier
54 this brand65 Lodging medianlikely 50–58: narrower with a newer filing (high confidence)
Higher is better · an editorial assessment, not investment advice
#1,461 of 3,069 graded brands
Why a B: Helped by financial health and transparency. Held back by unit growth and scale. See all six factors
- Total investment
- $175K – $955K
- Avg gross sales
- partial, no system average
- SBA charge-off
- 1.1%
1 in 93 SBA 7(a) loans to Econo Lodge owners charged off (1 of 93 resolved loans, approved since FY1991); Lodging median 3.2%. Loans approved FY2014–FY2017: 1 of 85 resolved loans charged off (1.2%); newer loans have not had time to default, so this is not a trend.
Data from the FDD filing + SBA 7(a) records. Analysis by FranchiseVerdict · Methodology · Website · Report an error · Franchisor? Claim this listing
This data is from a 2024 FDD. Current terms may differ. Always verify with the franchisor's latest disclosure document.
Econo Lodge is a Choice Hotels economy-lodging franchise of budget roadside properties. Franchisees own and operate individual hotels, running front desk, housekeeping, and maintenance on Choice's reservation and marketing systems.
FranchiseVerdict summary · 2024 FDD
Per the 2024 FDD, a Econo Lodge franchise requires a total initial investment of $175K – $955K, including a $30K franchise fee. Once open, the ongoing royalty is 5.0%. The 2024 FDD on file does not yield a unit-revenue figure we can publish. SBA 7(a) loans show a 1.1% charge-off rate on 93 resolved loans. Verdict grade: B (Second tier), an editorial assessment, not investment advice.
Sources: 2024 FDD · SBA 7(a) loan records (FOIA) · What one unit could make and lose →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: high (issued more than two years ago)
Evidence for the headline figures: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored4 of 5 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
Quick verdict · vs Lodging median
Top edge: green = better than the Lodging median by more than 10%, red = worse by more than 10%, gray = within 10% or no benchmark. Source: FDD filings + SBA 7(a).
Data from public FDD filings and SBA records. Methodology
Bottom line
- RETURNSItem 19 reports occupancy, ADR and RevPAR rather than annual gross sales, so the figure is not directly comparable.
- GROWTHIn the latest Item 20 year, the number of franchised outlets fell by 25 (29 opened, 54 closed).
- LEGAL91 litigation matters disclosed in Item 3, higher than typical. Of the 15 listed on this page, 14 name the franchisor or its predecessor, 1 its parent or affiliates. Pending claims are allegations, not findings.
AT STAKEOne unit at the Item 7 midpoint: $73K a year in payments on assumed SBA 7(a)-style terms.You put in about $113K of your own cash and personally guarantee a $452K loan. Assumptions are labeled in Sales; not investment advice.See what one unit could make and lose
Things to check before you sign (5)
- Net -25 franchised outlets in 2023 (Item 20, outlet counts). Ask owners why outlets closed.
- 2 pending matters name the franchisor in Item 3 (litigation). Pending claims are allegations, not findings.
- The franchisor keeps the right to compete inside your territory (Item 12, territory).
- You waive a jury trial in disputes with the franchisor (Item 17, renewal, termination and disputes).
- The franchisor receives rebates or payments from suppliers you buy from (Item 8, required suppliers).
Checked and clear: no auditor doubt that the franchisor can keep operating, SBA charge-off rate 1.1%, below the 3.2% category median, no rule that the owner must run it personally and the full filing on file, and an Item 19 average from 633 units.
What to do next
Step 1: Read the FDD itself.
Free: read the 2024 filing on this site, page by page. The franchisor must also give you its current FDD at least 14 days before you sign or pay. Or look it up in a state registry (Wisconsin, Minnesota, California). What to read first.
Step 2: Talk to current and former owners.
Free: Item 20 of the FDD lists every current owner and those who left last year, most with a phone number. Questions to ask.
Step 3: Talk to an SBA lender.
Free: the SBA's Lender Match, or the lenders already lending to this brand in the SBA section. Ask what you would personally guarantee and what the monthly payment would be. If you plan to use retirement savings, ask a CPA about the rules for that first.
Step 4: Have a franchise attorney review the FDD and agreement.
Free: your state bar's lawyer referral service can name franchise lawyers, and many offer a short first consultation. Bring the checks listed above.
Research steps, not investment or legal advice.
Can you afford it, and what does the money buy?
Entry cost (the Item 7 midpoint) is 93% below the Lodging median ($8.5M).
Source: FDD 2024 · Items 5–7 (fees and startup costs)
Do you qualify? The filing states no minimum net worth or liquid capital. Ask Choice Hotels International, Inc. (Item 1: 915 Meeting Street, Suite 600, North Bethesda, Maryland 20852) and your lender what they require, and keep living costs for the first year outside the deal.
Full Item 7 breakdown13 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Affiliation Fee | $30K | $35K | |
| Property Improvements | $68K | $510K | |
| Insurance | $2.5K | $87.5K | |
| Advertising | $2.5K | $40K | |
| Opening Inventories of Supplies | $10.2K | $68K | |
| Orientation and Hospitality Training Fees | $1.4K | $3.35K | |
| Mandatory On-Premise Signs | $15K | $80K | |
| Working Capital Required Before Operations Begin | $10K | $30K | |
| Hardware required to operate choiceADVANTAGE property management system | $3.8K | $10.8K | |
| choiceADVANTAGE Software License and Systems Onboarding | $5.25K | $7.25K | |
| Design and engineering costs and inspections | $10K | $50K | |
| Pre-Opening Photography | $1.4K | $3K | |
| Additional Funds for 3-Month Initial Period | $15K | $30K | |
| Total initial investment | $175K | $955K |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. The total row is the total as printed in Item 7. Actual costs may fall outside this range depending on market and build-out scope.
Item 6 · what you pay once you are open
Ongoing fees
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 3.5% of gross sales |
| Technology feechoiceADVANTAGE Support Fee $328-$653/month based on room count | $328–$653/month |
| Training feeAdditional training charge listed in Item 6 | $3,345 |
| Transfer fee | $35,000 |
| Renewal fee | $35,000 |
| Total fee loadnear the Lodging median of 8.5% | 8.5% of sales |
What do units actually make?
Source: FDD 2024 · Item 19 (sales and earnings)
Items 6 (other fees), 7 (startup costs) and 19 (sales and earnings) · assumptions labeled
What you could make and lose: one unit
What one Econo Lodge unit would ask of you, from the filing's Item 7 total and labeled assumptions.
How these figures are worked out
- Loan (assumption): 80% of the $565K Item 7 midpoint is a $452K loan, paid over 10 years at 10.5%: $73K a year. SBA 7(a)-style terms on a long-term rate; your lender sets yours. Econo Lodge's past SBA 7(a) loans averaged 5.4% at approval; 7(a) rates move with the prime rate, so 10.5% is a current-rate assumption, not this brand's history.
What you put at risk
Your own cash in: about $113K Assumption (the part the loan does not cover of the $565K Item 7 midpoint), plus whatever anything Item 7 leaves out (its notes say what). The loan is $452K.
Personal guarantee. SBA 7(a) loans require a personal guarantee from anyone who owns 20% or more of the business. If the unit cannot pay, the lender can collect from you personally, which can include your savings and your home. The worst case is losing the cash you put in and still owing the rest of the loan.
Gross sales are not profit, and none of these figures is take-home pay until tax and every operating cost are paid. The assumptions are ours, not the filing's. Not investment advice.
Returns modelOne unit · several units · editable
Item 19 of the Econo Lodge FDD discloses figures for part of the system but no single average across all outlets. The return models need one gross sales figure to start from, plus the operating costs that turn gross sales into a profit. Enter your own and the calculator runs on your assumptions; nothing here is modelled until you do.
Returns model · one unit
What would one Econo Lodge unit leave you each year after the loan payment?
Not disclosed in Item 19. Enter your own gross sales assumption
Gross sales, not profit: the costs below decide what is left.
No Item 19 figures are on file for this brand. Enter your own costs from a lease quote, a payroll plan and calls with current owners.
Illustrative category typicals, not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Item 7 midpoint of $175K to $955K
Item 7's $10K to $30K additional funds are already in the total
Left after the loan payment · per year
The unit's EBITDA minus the assumed loan payment. Before tax, depreciation and any cost your inputs leave out (insurance, accounting and legal, licenses, technology fees): not take-home pay.
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies annual revenue, direct costs, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
Loan of $452K at 10.5% over 10 years, an assumption, not a quote. Return and payback are before tax, depreciation and the costs above. The loan usually needs your personal guarantee.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2024 FDD · filed by Choice Hotels International, Inc.
Financial performance
Percentile ranks within Lodging
Each rank is among the Lodging brands that report that figure (the count is under each bar).
vs Lodging medians
How Econo Lodge compares
Category median of published Lodging brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Who are you contracting with?
Choice Hotels International, Inc.
Same franchisor, other programs: ASCEND HOTEL COLLECTION, Clarion / Clarion Pointe, Comfort Inn, Country Inn & Suites by Radisson, Everhome Suites, MainStay Suites, Park Inn by Radisson, RODEWAY INN, Radisson Blu, Radisson Individuals, Sleep Inn, Suburban Studios, WoodSpring Suites. Each is a separate offering with its own page.
Item 1 (the franchisor) · who you're contracting with
The franchisor
Corporate structure & franchisor financials
- Legal entity
- Choice Hotels International, Inc.
- Parent company
- Choice Hotels International, Inc.
- FDD Item 1, page 8 of the 2024 FDD
- Incorporated in
- Delaware
- HQ
- 915 Meeting Street, Suite 600, North Bethesda, Maryland 20852
- Auditor
- Ernst & Young LLP
- Audited financials
- Franchisor revenue
- $1.5B
- latest fiscal year in the 2024 FDD; $1.4B the year before
Franchisee associations and councils
- Franchise Advisory Council (FAC)
As the filing names them; ask whether each is independent or set up by the franchisor (Item 11 or 20).
Same owner · FDD Item 1, page 8
12 other brands on this site name Choice Hotels International, Inc. as parent or ultimate parent in their own FDD.
- ASCEND HOTEL COLLECTION (grade B)
- Clarion / Clarion Pointe (grade B)
- Comfort Inn (grade A)
- Country Inn & Suites by Radisson (grade A)
- Everhome Suites (grade B)
- MainStay Suites (grade A)
- Park Inn by Radisson (grade B)
- RODEWAY INN (grade B)
- Radisson Individuals (grade C)
- Sleep Inn (grade A)
- Suburban Studios (grade A)
- WoodSpring Suites (grade B)
Grouped by the owner's name as each filing prints it (this page: the 2024 FDD). Spelling variants of the same group may be listed apart; a brand is never grouped with an owner its filing does not name.
Overview
About
- CEO
- Patrick S. Pacious
- Franchised outlets in
- 48 states and territories
- Item 20 Table 3, at year end
- States and territories listed
- 48
- registered or offered in, as the filing lists them (DC and territories included); not where units may open
Is the system healthy?
-57 franchised outlets over the two years to 2023 (734 to 677, -7.8% in total, -4.0% a year compounded).
Source: FDD 2024 · Item 20 (outlets opened, closed and transferred)
Item 20 (outlet counts) · unit dynamics
The growth chart
- Company-owned
- 0
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
Last fiscal year · Item 20 rates and pipeline
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 13
- 1 for every 52 open outlets · Item 20 Table 5
- Projected new
- 11
- Franchisor's next-year forecast
- Termination rate
- 1.5%
- Franchisor-initiated terminations
Item 20 · franchised units at year end
Franchised units fell from 734 in 2021 to 677 in 2023
Axis does not start at zero.
Source and method
Item 20 (outlet counts) Table 3 · franchised outlets at year end
Where current outlets are
Franchised outlets at year end by state, as the filing's Item 20 Table 3 counts them. Not a list of where the franchisor may sell new units.
Current outlets (count on the tile) · 48 statesNo current outlet
677 franchised outlets at year end in 48 states (Item 20 Table 3).
Government records
SBA loan data
Lenders charged off 1.1% of 93 resolved SBA 7(a) loans, below the 3.2% category median. 7(a) is the SBA's main small-business loan; a resolved loan was paid in full or charged off.
- Loans on file
- 121
- SBA 7(a) loans matched to this brand, incl. those still being repaid
- Loan volume
- $188.9M
- Average loan
- $1.6M
- loan volume divided by loans
- Charge-off rate
- 1.1%
- 1 of 93 resolved loans
- Paid in full
- 98.9%
- of resolved loans
- Charge-off, loans approved FY2014–FY2017
- 1.2%
- 1 of 85 resolved loans; newer loans have not had time to default, so this is not a trend
- Lenders
- 57
- Average interest rate
- 5.4%
- Jobs reported
- 1,211
- Lender concentration
- 7%
- top lender's share
Cumulative: every 7(a) loan matched to this brand in the SBA’s FOIA files, approved FY1991 onward. Historical lending data, not predictive of future performance. How SBA charge-off rates are calculated
Benchmark: the median Lodging brand charges off 3.2% (29 brands with a published rate, same cumulative window and source). This brand is 2.1 points below it.
The approval-year breakdown covers 88 of the 93 resolved loans and 1 of the 1 charge-offs (FY2013 to FY2017).
SBA 7(a) · charge-off rate by approval year
Econo Lodge: below all franchise loans in each of the 4 rated years
Hollow rings on the axis: years with fewer than 10 resolved loans, not rated (too few to judge). Their numbers are in the table.
Show the numbers by year
| Year | Resolved | Charged off | Rate |
|---|---|---|---|
| 2013 | 3 | 0 | Too few |
| 2014 | 15 | 0 | 0.0% |
| 2015 | 24 | 0 | 0.0% |
| 2016 | 21 | 0 | 0.0% |
| 2017 | 25 | 1 | 4.0% |
Dashed line: all franchise 7(a) loans approved the same year.
Source and method
Explore lender portfolios on Bank Reports or regional data on State Reports.
Full SBA lending reportlenders · charge-off rate · trend
Lender network · SBA 7(a)
SBA Lending Report
Lender, state and yearly detail for Econo Lodge from SBA 7(a) FOIA loan records.
- Average SBA guarantee
- 74%
- Average interest rate
- 5.4%
- Lender concentration
- 7%
- Jobs reported
- 1,211
Top 10 SBA lenders by loan count
| Loans | Volume | Charge-off |
|---|---|---|
| First Western SBLC, Inc | ||
| 8 | $10.2M | Too few6 resolved |
| PromiseOne Bank | ||
| 7 | $10.1M | Too few6 resolved |
| BankUnited, National Association | ||
| 6 | $9.7M | Too few6 resolved |
| Columbia Bank | ||
| 6 | $8.3M | Too few5 resolved |
| Commonwealth Business Bank | ||
| 6 | $11.5M | Too few4 resolved |
| TD Bank, National Association | ||
| 5 | $7.4M | Too few3 resolved |
| Bank of Hope | ||
| 5 | $6.0M | Too few3 resolved |
| Pinnacle Bank | ||
| 5 | $7.5M | Too few2 resolved |
| Hanmi Bank | ||
| 5 | $10.7M | Too few5 resolved |
| The Huntington National Bank | ||
| 4 | $2.7M | Too few4 resolved |
A lender’s rate counts only its resolved loans, the loans that have finished (paid in full or charged off); a 0.0% often means few of its loans have finished. Under 10 resolved loans, the rate reads “Too few”.
Charge-off rate by state (top 10 by loans)
| State | Loans | Charged off | Rate |
|---|---|---|---|
| CA California | 14 | 0 | 0.0%11 resolved |
| GA Georgia | 10 | 0 | Too few7 resolved |
| OH Ohio | 10 | 0 | Too few9 resolved |
| PA Pennsylvania | 9 | 0 | Too few6 resolved |
| NC North Carolina | 7 | 0 | Too few5 resolved |
| WA Washington | 7 | 0 | Too few6 resolved |
| CO Colorado | 6 | 0 | Too few6 resolved |
| TX Texas | 6 | 0 | Too few4 resolved |
| IL Illinois | 5 | 1 | Too few5 resolved |
| VA Virginia | 5 | 0 | Too few4 resolved |
Rate: charged-off loans over resolved loans (paid in full plus charged off), shown from 10 resolved loans. "Too few": under 10 resolved. The Loans column counts every approval in the window, including loans still being repaid.
SBA 7(a) loans approved per year
Industry context
Most of this brand’s borrowers recorded NAICS 721110 (Hotels & Motels) on their loans. Across every SBA 7(a) loan in that industry code, all approval years, franchised businesses charged off 6.3% (5,769 resolved loans) and independent businesses 9.2% (7,219 resolved loans). Franchising does not lower the rate in every industry.
Source: SBA 7(a) FOIA loan-level data, matched to the brand by FranchiseVerdict.
With a charge-off rate of 1.1% on 93 resolved loans, very few of this brand's SBA 7(a) loans have been charged off.
What are the risks?
Main risk in the grade: scale, then unit growth. The reasons are below.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Verdict grade + FDD Items 3 (litigation), 4 (bankruptcy), 8 (required suppliers), 16 (what you may sell), 21 (audited financials)
Risk and legal
Grade B: Second tier, 54/100 (category median 65); the full grade is at the top of the page.
How the grade is built
Econo Lodge's main risks are a contracting unit base, aggressive litigation against franchisees, undisclosed unit economics, unprotected territories, and evidence of strained franchisor-franchisee relationships.
Why a B, factor by factor
- Financial health HelpsAudited financials; no going-concern doubt; statements are the parent's, so this stays near neutral
- Unit economics NeutralNo Item 19 sales figure to set against the investment, so neutral
- Unit growth Weighs on it-57 franchised outlets over the two years to 2023 (734 to 677, -7.8% in total, -4.0% a year compounded); turnover 8.0%
- Scale Weighs on it, weakest dimensionNo outlet open yet
- Legal NeutralItem 3 covers the franchisor's whole portfolio, so no matter is attributed to this brand (neutral)
- Transparency HelpsItem 19 discloses financial performance; audited financials
- Adjustments after the six dimensions (+10 points)SBA loan record: the SBA charge-off rate (1.1% on 93 resolved loans) is under 2%, a range the score counts in a brand's favour, so it added 10 points.
From the six scored dimensions, an editorial assessment, not investment advice. How the score is built
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
3 pending actions: (1) Canadian class action re undisclosed destination marketing fees; (2) ~90 franchisees' suit re discriminatory/anticompetitive practices, stayed pending arbitration; (3) T&T Management breach/trade-secrets suit. Franchisor also initiated numerous debt-collection arbitrations in prior fiscal year.
Largest disclosed settlement in the franchisor's own cases: $85,000
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Ernst & Young LLP
Franchisor revenue (Item 21)
The revenue figures are in the Franchisor tab, under The franchisor.
Franchisor entity revenue (not unit-level)
Audited consolidated financials of Choice Hotels International, Inc. (parent/franchisor). FY2023 total revenues $1,544,165K; includes royalty/licensing/management fees $513,412K, initial franchise fees $27,787K, platform/procurement $75,114K, owned hotels $97,641K, other $46,051K, and other revenues from franchised/managed properties $784,160K.
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results; the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
Ask what the franchisor earns on the supplies it sells you or the rebates it takes (Item 8).
- Franchisor sells you products: Yes
- Franchisor takes supplier rebates: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
Notes from the filing review · not the score inputs
- 01MEDShrinking unit base (-3.6% YoY) indicates systemic franchise dissatisfaction or market decline
- 02HIGHMajor litigation including class action by ~90 franchisees alleging discriminatory practices and anti-competitive behavior raises systemic franchisor conduct concerns
- 03MINORMultiple royalty recovery lawsuits against former franchisees indicate cash flow stress and potential collection practices that may signal franchisor financial distress
- 04MINORUnprotected territory creates direct competition risk within same brand, eroding franchisee profitability
- 05MEDHigh royalty burden (5% of gross revenues) on mid-scale investment ($175K – $955K) with no disclosed average gross sales creates uncertainty on net margins
- 06HIGH20-year term locks franchisees into commitment despite declining brand momentum and litigation exposure
Severity inferred from the FDD text · not a regulatory classification
Litigation case detail91 matters · Item 3
Litigation cases
The franchisor
Pending (2)
T&T Management, Inc. v. Choice Hotels International, Inc., Country Inn & Suites by Radisson, Inc. and Sunshine Fund Port Orange, LLC
pendingBrought by a franchisee · filed 2023-06-26 · United States District Court for the Middle District of Florida · 6:23-cv-01187
“… United States District Court for the Middle District of Florida, Case No. 6:23-cv-01187 On June 26, 2023, Plaintiff T&T Management, Inc. (“Licensee”) commenced a federal district court action in Florida”Page 22 of the 2024 FDD, Item 3
Jai Sai Baba, LLC, et al. v. Choice Hotels International, Inc., et al.
pendingBrought by a franchisee · filed 2020 · United States District Court for the Eastern District of Pennsylvania · 2:20-cv-02823
“… United States District Court for the Eastern District of Pennsylvania, Case No. 2:20-cv- 02823 On June 12, 2020 (amended on July 15, 2020), approximately ninety current and former franchise owners that own and operate one or more Choice branded hotels”Page 21 of the 2024 FDD, Item 3
Within this matter, as the filing narrates it
Choice Hotels International, Inc. v. DIP Hospitality, LLC, et al.
pendingBrought against a franchisee · names the franchisor · filed 2021-04-09 · American Arbitration Association · 01-21-0003-7036
“… American Arbitration Association, Case #01-21-0003-7036 On April 9, 2021, Choice initiated this arbitration to pursue contractually due franchise fees, a promissory note balance, and lost profit damages from the franchisees in the amount of $498,495.93.”Page 21 of the 2024 FDD, Item 3
Counted as one matter, the way Item 3 groups it.
Concluded (4)
Dahya Investments Incorporated, et al. v. Choice Hotels International, Inc., et al.
judgmentBrought by a franchisee · filed 2021-06-29 · American Arbitration Association; United States District Court for the District of Maryland, Southern Division · AAA 01-21-0004-5563; 8:2023cv01685
“… American Arbitration Association, Case #01-21-0004-5563 United States District Court for the District of Maryland, Southern Division, Case No. 8:2023cv01685 On June 29, 2021, Dahya Investments Incorporated and Dinu Patel (“Dahya”) filed an arbitration against Choice Hotels International, Inc.”Page 28 of the 2024 FDD, Item 3
Outcome: “A Final Award was issued on May 9, 2023, against Choice and in favor of Dahya in the amount of $882 and in favor of Choice and against Dahya for the sum of $603,483.00. Choice filed a motion to confirm the Final Award against Dahya and the Final Award was confirmed into a judgment on January 17, 2024 at the motion to seal hearing.”
Highmark Lodging, LLC, et al. v. Choice Hotels International, Inc., et al.
judgmentBrought by a franchisee · filed 2021-06-29 · American Arbitration Association; United States District Court for the Eastern District of Pennsylvania · AAA 01-21-0004-5554; 5:20cv2823
“… American Arbitration Association, Case #01-21-0004-5554 United States District Court for the Eastern District of Pennsylvania, Case #5:20cv2823 On June 29, 2021, Highmark Lodging, LLC and Darshan Patel (“Highmark”) filed an arbitration against Choice Hotels International, Inc.”Page 27 of the 2024 FDD, Item 3
Outcome: “A Final Award was issued on July 27, 2023 against Choice and in favor of Highmark in the amount of $740,072.25. Highmark filed a motion to confirm the Final Award and Choice filed a motion to vacate in part. Choice’s motion was denied, and a final judgment was entered against Choice in the amount of $779,398.40 on March 4, 2024.”
Sender Kohl v. Choice Hotels International, Inc.
settledBrought by a franchisee · filed 2018-10-29 · United States District Court for the Southern District of Florida, Fort Lauderdale Division, and American Arbitration Association · 0:18-cv-62597; AAA 01-19-0000-1797
“… United States District Court for the Southern District of Florida, Fort Lauderdale Division, Case #0:18-cv-62597 and American Arbitration Association, Case #01-19-0000-1797 On October 29, 2018, Sender Kohl filed an action against us seeking damages in an unspecified amount.”Page 27 of the 2024 FDD, Item 3
Outcome: “On August 25, 2021, the parties settled this dispute. As part of the settlement, Choice agreed to pay its former franchisee $85,000.00 in exchange for dismissal of the arbitration.”
Wydredge, L.L.C., H & P Investments, Clayton Wyman, Barry Eldredge and James Rumpsa v. Choice Hotels International, Inc.
settledBrought by a franchisee · filed 2012-08-31 · American Arbitration Association · 16-114-000517-12
“On August 31, 2012, Wydredge, L.L.C., H & P Investments, Clayton Wyman, Barry Eldredge and James Rumpsa filed an arbitration demand against Choice Hotels International, Inc. The arbitration demand sought unspecified damages for unjust enrichment, intentional misrepresentation, negligent misrepresentation, breach of contract, and breach of implied covenant of good faith and fair dealing.”Page 27 of the 2024 FDD, Item 3
Outcome: “On July 7, 2014, the parties settled this dispute. As part of the settlement, Choice made certain concessions to franchisees in connection with two existing franchise agreements for other properties owned by franchisees reducing the royalty rate to 4.65% for 24 months and 4.25% for 24 months respectively.”
Status not stated in the filing (8)
Choice Hotels International, Inc. v. 144 Investors, LLC and Surjeet Kaur
Brought against a franchisee · filed 2023-08-11 · U.S. District Court Eastern District of New York (Brooklyn) · 1:23cv06066
“144 Investors, LLC and Surjeet Kaur U.S. District Court Eastern District of New York (Brooklyn) 1:23cv06066 August 11, 2023”Page 27 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. 67585 Hacienda, LLC and Calvin Chun
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4410
“67585 Hacienda, LLC and Calvin Chun American Arbitration Association 01-23-0000-4410 January 31, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. Donald R. Dreiske, Lance B. Stuart, James R. Stuart, Harvey W. Lester and Rebecca Kenny
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4309
“Donald R. Dreiske, Lance B. Stuart, James R. Stuart, Harvey W. Lester and Rebecca Kenny American Arbitration Association 01-23-0000-4309 January 31, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. Jai Sai Baba, LLC, Dipesh Patel and MDPD13 Investments, LLC
Brought against a franchisee · filed 2023 · United States District Court for the District of Maryland, Southern Division, transferred to United States District Court for the Eastern District of Pennsylvania, Philadelphia · 8:2023cv00146; 8:2023cv03360
“Jai Sai Baba, LLC, Dipesh Patel and MDPD13 Investments, LLC United States District Court for the District of Maryland, Southern Division, transferred to United States District Court for the Eastern District of Pennsylvania, Philadelphia 8:2023cv00146 8:2023cv03360 January 19, 2023 August 25, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. Jeet Hospitality, Inc. and Indravaden Patel
Brought against a franchisee · filed 2023-02-02 · American Arbitration Association · 01-23-0000-4726
“Jeet Hospitality, Inc. and Indravaden Patel American Arbitration Association 01-23-0000-4726 February 2, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. Kei. V. Inc. and Seyed A. Mousavizadeh
Brought against a franchisee · filed 2023-02-02 · American Arbitration Association · 01-23-0000-4732
“Kei. V. Inc. and Seyed A. Mousavizadeh American Arbitration Association 01-23-0000-4732 February 2, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. Le Cercle Rouge, LLC, David Adehou and Milan G. Mody
Brought against a franchisee · filed 2023-01-31 · American Arbitration Association · 01-23-0000-4439
“Le Cercle Rouge, LLC, David Adehou and Milan G. Mody American Arbitration Association 01-23-0000-4439 January 31, 2023”Page 22 of the 2024 FDD, Item 3
Choice Hotels International, Inc. v. SC Hotel Group, LLC, SC Hotel Partners, LLC, Lajwanti Gandhi and Rolan Chowdhury
Brought against a franchisee · filed 2023-01-18 · Circuit Court for Montgomery County, Maryland · C15CV23000171
“SC Hotel Group, LLC, SC Hotel Partners, LLC, Lajwanti Gandhi and Rolan Chowdhury Circuit Court for Montgomery County, Maryland C15CV23000171 January 18, 2023”Page 22 of the 2024 FDD, Item 3
Parent, affiliates, master franchisor and subfranchisor
Pending (1)
Norma Knuth v. Radisson Hotels International, Inc., et al.
pendingRadisson Hotels International, Inc. and Country Inn & Suites by Radisson, Inc. ('Country'), now wholly owned subsidiaries of the franchisor Choice · filed 2014-12-05 · Court of Queen’s Bench for Saskatchewan · QBG No. 2560 of 2014
“… Court of Queen’s Bench for Saskatchewan, Court File No. QBG No. 2560 of 2014 On December 5, 2014, Norma Knuth filed a complaint under the Class Actions Act against over 25 named defendants, including Country, alleging that the defendants wrongfully collected undisclosed destination marketing fees”Page 21 of the 2024 FDD, Item 3
Within this matter, as the filing narrates it
Matter with no printed caption
Brought against a franchisee · names an affiliate · Radisson and Country (claimants for contribution and indemnification) · filed 2017-06-02 · Court of Queen’s Bench for Saskatchewan (implied; within Knuth)
“On June 2, 2017, Radisson and Country filed a Statement of Claim against 2 current and 3 former franchisees/licensees, that had not entered into tolling agreements, seeking contribution and indemnification.”Page 21 of the 2024 FDD, Item 3
Counted as one matter, the way Item 3 groups it.
This list shows 15 of the 91 matters Item 3 discloses; the rest are in the filing.
2 of the proceedings above are indented under the matter they belong to because the filing narrates them inside it — an appeal, a consolidated case, a related arbitration. Each carries its own quote and page. They are counted with their matter, not as extra matters, so this list and the 91 Item 3 discloses agree.
Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.
What are you signing up for?
Ongoing fees run about 8.5% of sales (royalty + ad fund), before your own operating costs.
Source: FDD 2024 · Items 11, 12, 17
FDD Items 12 (territory), 15 (owner participation) and 17 (renewal, termination and disputes)
Contract and territory detail
| Allowed renewals | 0 |
|---|---|
| Protected territory | No |
| Exclusive territory | No |
| Online sales rights | Allowed |
| Franchisor can compete | Yes |
| Who runs it (Item 15) | A manager may run it |
| Right of first refusal | No |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Termination grounds | 12 |
| Mandatory arbitration | Yes |
| Arbitration location | Maryland |
| Jury trial waiver | Yes |
| Governing law | MD |
Items 10 (financing), 11 (training and support)
Training and operations
- Classroom training
- 47 hrs
- On-the-job training
- 0 hrs
- Training location
- North Bethesda, Maryland or Scottsdale, Arizona (Choice Onboard); virtual (HOST)
- Ongoing training
- Required
- Time to open
- 18 mo
- From signing to launch
- Site selection
- Franchisee selects; franchisor must approve
- Franchisor financing
- Offered
- Item 10
- POS system
- choiceADVANTAGE
- Operating tech stack
Items 5 (initial fees) & 11 (training and support)
Franchisor support
Item 20 (outlet counts) · call current owners
Franchisee contacts
Who can you call before you sign?
78 current outlets listed
Each record has a phone number and state. No franchisee names or cities. 78 records. From the filing's Item 20 (the outlet list); the FDD itself is the free source. Our list covers 78 of the 677 franchised outlets Item 20 counts at year end; the owner exhibit prints the rest without a usable phone number, or omits them.
For your own due-diligence calls only. Not for telemarketing, marketing lists, or automated or prerecorded calls or texts.
The list is not offered for this brand yet. The FDD's Item 20 exhibit lists the owners.
Frequently asked questions
How much does it cost to open a Econo Lodge franchise?
Per the 2024 FDD, the total investment to open a Econo Lodge franchise ranges from $175K to $955K, with an initial franchise fee of $30K. This is the Item 7 total in the Franchise Disclosure Document (FDD): the startup costs the franchisor lists, such as build-out, equipment, inventory and working capital. It usually leaves out buying land or a building; Item 7's notes say what is excluded.
What do Econo Lodge franchise owners earn?
Item 19 of the Econo Lodge FDD discloses figures for part of the system but no single average across all outlets. These are gross sales figures, not profit; the Revenue section shows what the filing reports and on what basis. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Who owns Econo Lodge?
Econo Lodge is franchised by Choice Hotels International, Inc. Source: FDD Item 1, 2024 filing.
What is Item 19 in the Econo Lodge FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Econo Lodge FDD and qualifies whose outlets they describe.
What is Econo Lodge's franchise failure rate?
There is no published franchise failure rate. What is measurable is Econo Lodge's SBA charge-off rate: 1.1% on 93 resolved loans. Put plainly: 1 in 93 SBA 7(a) loans to Econo Lodge owners charged off (1 of 93 resolved loans, approved since FY1991); loans approved FY2014–FY2017: 1 of 85 resolved loans charged off (1.2%); newer loans have not had time to default, so this is not a trend. The SBA charge-off rate is the share of a brand's resolved SBA 7(a) loans to its franchisees that the SBA wrote off, including purchased guarantees. Resolved means paid in full or charged off; active loans are excluded because their outcome is not yet known. It is a lending outcome, not a count of closed businesses. A franchisee can repay and close, or default and keep trading.
How many Econo Lodge franchise locations are there?
Per the 2024 FDD, Econo Lodge has 677 franchised units and 0 company-owned (677 in all). In the latest year, the number of franchised outlets fell by 25 (29 opened, 54 closed).
Is Econo Lodge a good franchise to buy?
FranchiseVerdict gives Econo Lodge a B Verdict grade (Second tier) with a verdict score of 54 out of 100 (higher is better), an editorial assessment, not investment advice. Helped by financial health (audited financials) and transparency. Held back by unit growth (-57 franchised outlets over the two years to 2023: 734 to 677, -7.8% in total, -4.0% a year compounded) and scale (no outlet open yet). The “Why a B” section on this page lists all six dimensions and any adjustment. Speak with current franchisees before making any investment decision.
Other Lodging franchises
Similar investment first, then by grade
This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.