Bottom line
- Total investment $8.7M – $15.8M including a $50K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $2.1M/year (median $2.1M).
- Rated MODERATE with a risk score of 59/100. SBA loan default rate of 0.0% across 30 loans (below the industry average).
- 90 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one MainStay Suites unit return on the cash you put in?
Unlevered ROIC · per unit
2%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 MainStay Suites units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.9M
on $9.4M purchase
Total debt
$7.5M
SBA $4.7M + senior + seller note
Overview
About
MainStay Suites franchisees operate economy-segment extended-stay hotel properties under a 20-year license agreement. Day-to-day operations include managing front desk/housekeeping staff, maintaining occupancy rates, collecting rent/room revenue, and ensuring brand compliance with Choice Hotels standards while remitting 6% of gross room revenues as ongoing royalties.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 30 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
MainStay Suites presents elevated risk due to franchisor's aggressive litigation posture (71 royalty actions annually), opaque profitability metrics, anemic unit growth, and high capital requirements relative to disclosed revenues.
Score breakdown · what drove the 59 / 100 rating
- 01HIGHAggressive litigation pattern: 71 royalty recovery actions in one fiscal year suggests systemic collection issues or franchisee financial distress
- 02MEDHigh investment threshold ($8.7M–$15.8M) with undisclosed net income creates opacity on actual profitability and ROI
- 03MEDModest unit growth (9.6% YoY) with 126 units is underwhelming for a branded economy hotel chain; limited scale advantages
- 04MINORSignificant post-termination IP enforcement actions (12 cases) indicate compliance/brand protection problems among departed franchisees
- 05MEDRevenue-to-investment ratio concern: $2.1M average revenue against $8.7M–$15.8M investment suggests 5–8 year payback at best, before accounting for undisclosed expenses
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
60 numbers
One-time purchase · CSV download · Validation questions included
FDD download
MainStay Suites · FDD (2024) PDF