FranchiseVerdict
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A52/100FDD 2026

Extended Stay America Suites — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
52 / 100
FranchiseVerdict composite
Rating
STRONG
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
22
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
$77.6M
Avg loan size
$3.5M
Participating lenders
9

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
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
North Carolina
State whose law governs disputes — relevant if you're not based there

What drove the 52/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 financial performance data disclosed—unable to assess actual franchisee profitability or validate ROI claims
  2. 02MINORWide investment range ($210K–$14.3M) suggests highly variable unit economics and unclear capital requirements
  3. 03HIGHMultiple active litigation matters including antitrust software claims, IP enforcement actions, and settled guest refund disputes indicate operational and legal vulnerabilities
  4. 04MINORUnprotected territory creates direct competition risk; franchisees may compete with other company units or future franchisees in same market
  5. 05MINOR5.5% royalty on gross room revenue (not net) provides no relief during downturns and compounds during high-occupancy periods
  6. 06MINOR12.1% YoY unit growth is modest for extended-stay sector; unclear if growth is sustainable or reflects new development vs. acquisitions

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.