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D77/100FDD 2024

Project Alpha by Hilton — Litigation & Risk

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

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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
77 / 100
FranchiseVerdict composite
Rating
CAUTION
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
40
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

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 77/100 rating

Risk Score Breakdown

  1. 01MINORZero operating franchise units with unknown growth trajectory indicates system has not launched or has completely failed
  2. 02HIGHGoing concern status is FALSE, signaling potential insolvency or inability to continue operations
  3. 03MINORMultiple active class-action lawsuits (price-fixing, data sharing) plus pending state enforcement actions (Texas mandatory fees) expose franchisees to reputational and legal liability
  4. 04MINORNo average revenue or net income disclosure prevents ROI validation; combined with zero units, no performance data exists
  5. 05MINORUnprotected territory creates direct competition risk with other franchisees in same market
  6. 06HIGHFive prior concluded litigation actions (ADA compliance, antitrust consent decrees) demonstrate pattern of regulatory non-compliance
  7. 07HIGH23-year term locks franchisees into relationship with litigation-prone franchisor with deteriorating financial health
  8. 08MINORBreach of contract history (Portland Hotel, Destin Platinum LLC) suggests franchisor fails to honor agreements

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.