CAverage44/100FDD 2026
Red Lion Hotels: Litigation & Risk
Lodging · FDD Items 3, 4 & 5
Elevated Risk
23 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 23
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 44 / 100
- FranchiseVerdict composite · higher is better
- Rating
- C
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 23
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $56.2M
- Avg loan size
- $2.4M
- Participating lenders
- 17
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Required
- Disputes resolved outside court, limits your legal options
- 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
- Massachusetts
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Item 3 discloses 8 concluded stockholder lawsuits (2021) challenging RLHC/Sonesta merger proxy disclosures (settled, $240,000 in plaintiffs' fees paid); several concluded commercial suits including Radisson Hotels v. RLHC/SRLHF (tortious interference, settled $500,000), RLHF v. Polselli, Chu v. RLHF, RLHF v. Khan (2 related suits, settled $500,000), RLHF v. Vemulapalli ($80,000), RLHF v. Minnesota Hospitality ($150,000), RLHC v. Tiya Hospitality ($10,500), RLHF v. JS Three Star ($81,000 counterclaim); and 6 pending 2025 suits by Sonesta RL Hotels Franchising Inc. against former franchisees/guarantors to collect unpaid amounts (Bliss Investment, SIGMM, MSDS MGT, Gonzales WS Hospitality, Pardeshi LLC, Grain Valley Hospitality).
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.