Fairfield by Marriott: Litigation & Risk
Lodging · FDD Items 3, 4 & 5
Elevated Risk
16 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 16
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 88 / 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
- 86
- 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
- $323.5M
- Avg loan size
- $3.8M
- Participating lenders
- 50
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
Extensive litigation primarily related to 2018 Starwood data security breach (class actions, regulatory investigations, settlements totaling $52M+ to state AGs, £18.4M to UK ICO); resort/destination fee investigations and settlements; antitrust cases (STR data sharing, Amadeus Demand360); personal injury negligence; franchisee fee disputes. Many cases settled or concluded.
What drove the 88/100 verdict
Risk Score Breakdown
- 01MINORSignificant capital requirement ($12.3M–$34.5M) with no Item 19 financial disclosure to validate ROI expectations
- 02MINORStagnant unit growth (1.5% YoY) suggests market saturation and declining franchise appeal
- 03HIGHMulti-jurisdictional data breach litigation (2018 Starwood incident) with ongoing FTC, ICO, KVKK, OPC, and OAIC investigations creates reputational and compliance risk
- 04MINORUnprotected territory allows Marriott to saturate markets with competing Marriott brands, cannibilizing franchisee revenue
- 05HIGHAntitrust litigation regarding STR reports and pricing software indicates potential franchisor control over competitive positioning
- 06MINORMultiple class action lawsuits on resort/destination fees and credit card processing create operational and legal exposure for individual properties
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.