FranchiseVerdict
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B62/100FDD 2026

Hampton by Hilton — Litigation & Risk

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

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Elevated Risk

15 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
15
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
636
Government-backed loans issued
Default rate
6.2%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
22 loans
Loans charged off or defaulted
Total loan volume
$1.5B
Avg loan size
$2.3M
Participating lenders
98

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
New York
State whose law governs disputes — relevant if you're not based there

What drove the 62/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth (0.9% YoY) suggests market saturation or franchisee struggles in mature brand
  2. 02MEDNo disclosed average revenue or net income (missing Item 19) prevents ROI validation and suggests weak unit economics
  3. 03MINORHigh capital requirement ($17-29M) combined with 6% royalty on gross rooms revenue creates significant fixed obligations
  4. 04HIGHMultiple active litigation disclosures including antitrust class actions, deceptive trade practice settlements, and contract disputes indicate systemic legal/operational issues
  5. 05MINORUnprotected territory enables brand cannibalization and direct competition from other Hampton franchisees within market radius
  6. 06MINOR22-year franchise term is longer than industry standard (typically 10-15 years), reducing flexibility and increasing long-term risk exposure

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.