Red Roof Inn Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Red Roof Inn is an economy-lodging franchise of budget roadside and highway motels. Franchisees own and operate individual properties, running front desk, housekeeping, and maintenance to brand standards.
FranchiseVerdict summary · 2026
A Red Roof Inn franchise requires a total initial investment of $259K – $1.6M, including a $27K franchise fee and an ongoing 5.0% royalty[2]. The 2025 FDD does not disclose unit-level revenue (no Item 19). SBA 7(a) loans show a 5.5% charge-off rate across 461 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $259K – $1.6M
- 13th pct Lodging
- Avg gross sales
- N/A
- Royalty
- 5.0%
- 3rd pct Lodging
- Units
- 619
- 65th pct Lodging
- SBA charge-off
- 5.5%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Lodging · color = vs category peers
Green = favorable by >10% vs Lodging avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $259K – $1.6M including a $27K franchise fee, 5.0% ongoing royalty.
- RETURNSItem 19 reports Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution) rather than annual gross sales, so unit revenue is not directly comparable.
- RISKVerdict A (Strongest tier), verdict score 79/100 (higher is better). SBA loan charge-off rate of 5.5% across 461 loans (near or below the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- FLAGBankruptcy history disclosed in the FDD. Review Item 4 for details before proceeding.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Red Roof Franchising, LLC
- Parent company
- RRF Holding Company, LLC
- Ultimate parent
- WRRH LP
- CEO title
- President
- Zack Gharib
- Incorporated in
- Delaware
- HQ
- 7815 Walton Parkway, New Albany, Ohio 43054
- Auditor
- Plante & Moran, PLLC
- Audited financials
- Franchisor revenue
- $94.2M
- vs $92.0M prior year
Overview
About
- CEO
- Zack Gharib
- Headquarters
- OH
- FDD year
- 2025
- States available
- 38
Can you afford it, and what does the money buy?
Entry cost runs 91% below the typical lodging franchise.
Source: FDD 2025 · Items 5–7
published investment is a conversion of an existing 65-room property. The same filing prices new construction separately at $7,253,500-$8,899,600.
Full Item 7 breakdown20 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Application Fee/Initial Franchise Fee | $30K | $30K | |
| Opening Package | $3K | $3K | |
| Market Study | $0 | $10K | |
| Phase I Environmental Survey | $0 | $6K | |
| Design, Testing & Fees | $150K | $220K | |
| Site and Civil Work | $205K | $306K | |
| Landscaping and Irrigation | $37K | $75K | |
| Facility Construction | $6.0M | $6.9M | |
| Construction Contingency | $0 | $130K | |
| Owner Project Management | $45K | $91K | |
| Furniture, Fixtures, Equipment and Soft Goods | $574K | $665K | |
| Signage | $14K | $101K | |
| Opening Inventory and Supplies | $11K | $25K | |
| Utility Deposits | $9K | $27K | |
| Guest Wi-Fi System | $15K | $30K | |
| Voice Telephone System | $16K | $24K | |
| Reservation Platform / PMS Software License Fee and Computer Systems including Front Desk and Back-Office | $17K | $22K | |
| Insurance | $25K | $66K | |
| Training Expenses | $6K | $9K | |
| Additional Funds - 3 months | $112K | $154K | |
| Total initial investment | $7.3M | $8.9M |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $259K – $1.6M
- Top 40% of category vs category
- Liquid capital req'd
- $112K – $154K
- Top 40% of category vs category
- Franchise fee
- $27K – $27K
- Top 40% of category vs category
- Royalty
- 5.0%
- Gross Room Revenues · typical 6–8%
- Ad fund
- 4.0%
- typical 3–5%
- Total fee load
- 9.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 4.0% of gross sales |
| Technology fee | $6K |
| Training fee | $2K |
| Transfer fee | $15K |
| Renewal fee | $14K |
| Total fee load | 9.0% of rev |
What do units actually make?
Source: FDD 2025 · Item 19
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
Red Roof Inn did not disclose financial performance in FDD Item 19. The ROIC and return models require Item 19 revenue. Without it all inputs are estimates. You can still run the calculator with your own assumptions by entering an expected revenue figure.
Returns model · single-unit ROIC
What would one Red Roof Inn unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
8%
Below the 30–60% attractive-franchise band
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Item 19 type
- Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution)
- Sample size
- 584
- vs category median 99 · large
- Source filing
- FDD 2025
- The FDD edition these figures were read from
- Transparency
- 0 / 10
- vs category median 0 / 10 · typical
Compared against 174 Lodging brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Fee burden
Total ongoing fee load of 9.0% (near the Lodging average).
Disclosure
Item 19 reports Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution) rather than annual gross sales, so unit revenue is not directly comparable.
Operator retention
System expanding at 7.9% CAGR over 3 years across 619 units — operators are staying and new ones are joining.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Lodging averages
How Red Roof Inn Compares
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 619
- Opened
- 44
- Last reporting year
- Closed
- 1
- Terminated
- 20
- Franchisor ended the franchise (per Item 20)
- Turnover rate
- 0.2%
- Company-owned
- 35
- Corporate units in the system
- % franchised
- 94%
- vs corporate-owned
- Net growth (3-yr)
- +7.9%
- Net unit change over 3 years
- 3-yr CAGR
- +7.9%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 26
- Transfer rate
- 4.2%
- Owners selling to other franchisees
- Continuity rate
- 96.5%
- Units that stayed open
- Termination rate
- 3.2%
- Franchisor-initiated terminations
- Ceased ops
- 0.2%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 9 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 461
- Loan volume
- $950.7M
- Median loan
- $2.1M
- 50th percentile
- Charge-off rate
- 5.5%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 94.5%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 106
- Defaults
- 14
- Typical loan rate
- 6.2%
- avg rate to borrowers
- Franchised industry avg
- 6.3%
- brand beats franchise avg ↓
- Jobs supported
- 4,414
- 0.5 per loan
- Lender concentration
- 11%
- top lender's share
Borrower mix: 26% went to startups / new businesses, 74% to established operators
Franchise vs independent — in hotels (except casino hotels) and motels, franchised businesses charge off at 6.3% vs 9.2% for independents — franchising is associated with 32% lower SBA default risk in this category.
Vintage analysis
Red Roof Inn charge-off rate by loan vintage
Top lenders financing Red Roof Inn franchisees
Showing 3 of 106 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Red Roof Inn's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 15 states
- Startup risk premium and job creation velocity
- 22-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
What could kill this investment?
SBA loans charge off at 5.5% — 66% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Financially strong lodging franchisor with parent-level net worth of $26.6M, revenue $92.0M, and net income $15.5M, all audited. Only 3 Item-3 matters against a 619-unit system (normal for scale), and the sole bankruptcy is a prior employer of an officer, not the franchisor. Item 19 disclosed and 7.9% net unit growth.
Litigation (Item 3)
HP Holding LLC and HP Holding Hospitality LLC v. Red Roof Inns, Inc. and Red Roof Franchising, LLC (pending) - Former franchisee alleging breach of franchise agreement, tortious interference, and NJFPA violations. State of Maryland v. Red Roof Franchising, LLC (concluded) - Maryland Securities Commissioner inquiry into franchise activities.
Bankruptcy (Item 4)
Disclosed in last 7 years
In re ASTECH Engineered Products, Inc. (n/k/a AEP Legacy, Inc.), Case No. 22-10635-BLS (Bankr. Del.). Chapter 11 petition filed July 15, 2022. Plan of liquidation confirmed May 20, 2024.
Audited financials (Item 21)
Yes · Plante & Moran, PLLC
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 79 / 100 verdict
- 01HIGHOnly 3 litigation matters across 619 units
- 02HIGHBankruptcy is a prior-employer matter of an officer (ASTECH, Chapter 11 2022) — not the franchisor
- 03MINORPositive parent net worth $26.6M, net income $15.5M
- 04MEDAudited financials, Item 19 disclosed
- 05MINORNet growth +7.9%
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 9.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 20 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 1 |
| Territory type | exclusive |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Right of first refusalℹ | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | Ohio |
| Litigation count | 4 |
View Item 3 litigation summary
HP Holding LLC and HP Holding Hospitality LLC v. Red Roof Inns, Inc. and Red Roof Franchising, LLC (pending) - Former franchisee alleging breach of franchise agreement, tortious interference, and NJFPA violations. State of Maryland v. Red Roof Franchising, LLC (concluded) - Maryland Securities Commissioner inquiry into franchise activities.
Items 10, 11
Training & Operations
- Classroom training
- 37 hrs
- On-the-job training
- 7 hrs
- Training location
- Your Inn
- Ongoing training
- Required
- Field support
- 9 hrs/yr
- On-site visits per year
- Time to open
- 6 mo
- From signing to launch
- POS system
- Reservation Platform / PMS
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Reservation Platform / PMS
Item 20 · call current owners
Franchisee Contacts
96 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Red Roof Inn · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Red Roof Inn franchise?
The total investment to open a Red Roof Inn franchise ranges from $259K – $1.6M, with an initial franchise fee of $27K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Red Roof Inn franchise owners earn?
Red Roof Inn does not disclose average franchise owner earnings in their FDD Item 19. Not all franchisors are required to make financial performance representations. We recommend asking existing franchisees directly about their financial experience.
What is Item 19 in the Red Roof Inn FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Red Roof Inn FDD and qualifies whose outlets they describe.
What is Red Roof Inn's franchise failure rate?
Based on SBA 7(a) loan data, Red Roof Inn has a charge-off rate of 5.5% across 461 loans, meaning 5.5% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Red Roof Inn franchise locations are there?
As of their most recent FDD filing, Red Roof Inn has 619 total units in the United States, including 584 franchised units and 35 company-owned units. 44 new units were opened in the latest reporting year.
Is Red Roof Inn a good franchise to buy?
FranchiseVerdict rates Red Roof Inn as a A-grade franchise with a verdict score of 79 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.