FranchiseVerdict
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D75/100FDD 2026

Motto 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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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
Yes
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 75/100 rating

Risk Score Breakdown

  1. 01MINOROnly 6 units systemwide with minimal growth trajectory (20% YoY = 1.2 new units) indicates nascent, unproven brand with no economies of scale
  2. 02MINORMultiple class action antitrust lawsuits plus state attorney general investigations into mandatory fees create regulatory/legal liability exposure and reputational risk
  3. 03MEDNo disclosed average revenue or net income (missing Item 19) prevents prospective franchisees from validating unit economics or ROI projections
  4. 04MINORContract disputes with former franchisees regarding termination and brand standards suggest operational/enforcement issues and franchise relationship friction
  5. 05MINORUnprotected territory combined with ultra-long 22-year term locks franchisee into potentially uncompetitive position without geographic exclusivity
  6. 06HIGHGoing Concern designation absent (False) but combined with 6-unit system and litigation suggests financial instability or parent company concerns
  7. 07MINOR5% royalty on Gross Rooms Revenue (not Net) means fees apply regardless of profitability, increasing downside risk in market downturns

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.