B55/100FDD 2024
Hawthorn Suites by Wyndham — Litigation & Risk
Lodging - Hotels & Motels · FDD Items 3, 4 & 5
Elevated Risk
9 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 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
16
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
$59.7M
Avg loan size
$3.7M
Participating lenders
13
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 Jersey
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01MINORStagnant unit growth (1.5% YoY) indicates declining brand momentum and potential market saturation
- 02HIGHExtensive litigation portfolio spanning destination marketing fees, resort fees, privacy breaches, FTC settlement, and current franchisee contract disputes suggests systemic legal/operational vulnerabilities
- 03MEDNo Item 19 financial disclosure (Avg Revenue and Net Income not disclosed) prevents ROI validation and obscures true profitability
- 04MINORWide investment range ($316K–$14.1M) with unclear unit economics creates uncertainty around capital requirements and break-even timelines
- 05HIGHParent company (Wyndham) litigation history indicates potential for corporate decisions that negatively impact franchise operations (fee structures, brand reputation)
- 06MED5.5% royalty rate coupled with undisclosed revenue baseline makes margin analysis impossible for prospective franchisees
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.