Red Roof Inn Franchise Cost, Revenue & Review 2026
- Investment
- $259K – $1.6M
- Disclosed sales
- partial, no system average
- SBA charge-off
- 5.5%
- on 461 loans
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 on file does not yield a unit-revenue figure we can publish. 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 →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium - issued 12 to 24 months ago; a newer filing is likely on file
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored4 of 5 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $259K – $1.6M
- 14th pct Lodging
- Avg gross sales
- N/A
- Projection
- Royalty
- 5.0%
- 3rd pct Lodging
- Units
- 619
- 67th 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 median · 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 hotel occupancy metrics 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).
- GROWTHPositive: net +23 franchised outlets in the latest year (44 opened, 21 closed) (Item 20).
- FLAGItem 4 discloses a bankruptcy of an officer or of a company an officer ran, not of the franchisor. Review Item 4 for details.
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
- FDD Item 1, page 8 of the 2025 FDD
- Ultimate parent
- WRRH LP
- FDD Item 1, page 8 of the 2025 FDD
- CEO title
- President
- Zack Gharib
- Incorporated in
- Delaware
- HQ
- 7815 Walton Parkway, New Albany, Ohio 43054
- Auditor
- Plante & Moran, PLLC
- Audited financials
- Franchisor revenue
- $92.0M
- vs $94.2M prior year
Same owner · FDD Item 1, page 8
1 other brand on this site name WRRH LP as parent or ultimate parent in their own FDD.
Grouped by the owner's name as each filing prints it (this page: the 2025 FDD). Spelling variants of the same group may be listed apart; a brand is never grouped with an owner its filing does not name.
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 90% 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 breakdown13 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Application Fee/Initial Franchise Fee | $30K | $30K | |
| Opening Package | $3K | $3K | |
| Landscaping | $0 | $75K | |
| Facility Construction and/or Renovation | $33K | $650K | |
| Furniture, Fixtures, Soft Goods and Equipment | $39K | $455K | |
| Guest Wi-Fi System | $0 | $25K | |
| Signage | $10K | $51K | |
| Opening Inventory and Supplies | $11K | $25K | |
| Voice Telephone System | $0 | $24K | |
| Reservation Platform / PMS Software License Fee and Computer Systems including Front Desk and Back-Office | $17K | $22K | |
| Insurance | $0 | $74K | |
| Training Expenses | $6K | $9K | |
| Additional Funds (3 Months) | $112K | $154K | |
| Total initial investment | $259K | $1.6M |
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%
- 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 |
| Inventory (initial) | $11K – $25K |
| 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
No Item 19 revenue figure for Red Roof Inn is on file. The return models need a revenue figure to start from, and the operating costs that turn gross sales into a profit are in no FDD. Enter your own and the calculator runs on your assumptions — nothing here is modelled until you do.
Returns model · single-unit ROIC
What would one Red Roof Inn unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for annual revenue, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
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
An occupancy metric, not unit revenue
- Item 19 type
- Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution)
- Sample size
- 584
- vs category median 98 · large
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
Compared against 175 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 median).
Disclosure
Item 19 reports hotel occupancy metrics 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 medians
How Red Roof Inn Compares
Category median of published Lodging brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
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
- 21
- Terminated
- 20
- Franchisor ended the franchise (per Item 20)
- Turnover rate
- 3.4%
- 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
Last fiscal year · Item 20 exits and transfers
- Terminated
- 20
- Transferred
- 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.
Where the owners are · Item 20 owner list
96 current owners across 9 states.
- FL 30
- AL 26
- CA 15
- AR 7
- CT 7
- AZ 5
- DE 4
- CO 1
- GA 1
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
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%
- on 461 loans · 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.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Red Roof Inn from SBA 7(a) FOIA data.
- Principal loss rate
- 0.2%
- Avg SBA guarantee
- 76%
- Avg interest rate
- 6.20%
- Avg chargeoff amount
- $613K
- Lender concentration
- 10.5%
- Job velocity
- 0.5 per $100K
- Startup risk premium
- 0.0pp
- NAICS benchmark
- 7.6%
- NAICS 721110
- Jobs supported
- 4,414
Top SBA lendersTop lender holds 11% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | GBank | 38 | $96.1M | 0.0% |
| 2 | First Western SBLC, Inc | 26 | $54.9M | 7.1% |
| 3 | Peoples Bank | 17 | $36.7M | 0.0% |
| 4 | PromiseOne Bank | 16 | $19.8M | 0.0% |
| 5 | Celtic Bank Corporation | 15 | $40.9M | 0.0% |
| 6 | Cadence Bank | 12 | $27.4M | 0.0% |
| 7 | Shoreham Bank | 12 | $31.4M | 0.0% |
| 8 | Fulton Bank, National Association | 11 | $37.8M | 0.0% |
| 9 | BankUnited, National Association | 10 | $18.8M | 0.0% |
| 10 | The Huntington National Bank | 9 | $11.0M | 0.0% |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| TXTexas | 35 | 0 | 0.0% |
| GAGeorgia | 32 | 0 | 0.0% |
| OHOhio | 29 | 0 | 0.0% |
| MIMichigan | 24 | 0 | 0.0% |
| INIndiana | 23 | 0 | 0.0% |
| SCSouth Carolina | 22 | 0 | 0.0% |
| PAPennsylvania | 21 | 0 | 0.0% |
| CACalifornia | 19 | 0 | 0.0% |
| FLFlorida | 16 | 0 | 0.0% |
| NCNorth Carolina | 16 | 0 | 0.0% |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
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)
Subject: the franchisor is a named party (defendant).
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)
Subject: an officer. An officer’s own bankruptcy or a company an officer ran, not the franchisor’s
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)
Franchisor consolidated revenue includes royalties, marketing/reservation fees, and other franchise-related fee income; not franchisee unit-level revenue.
ⓘ 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 territory |
| 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 |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | No |
| Arbitration location | Columbus, Ohio (mediation is required by FA Section 17.6; litigation venue is Ohio) |
| 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
- Site selection
- Franchisor approves site (does not locate or negotiate purchase/lease)
- Franchisor financing
- Not offered
- Item 10
- 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
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?
Item 19 of the Red Roof Inn FDD discloses figures for part of the system but no single average across all outlets. These are gross sales figures, not profit; the Revenue section shows what the filing reports and on what basis. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Who owns Red Roof Inn?
Red Roof Inn is franchised by Red Roof Franchising, LLC. Its parent company is RRF Holding Company, LLC. The ultimate parent named in the FDD is WRRH LP. Source: FDD Item 1, 2025 filing.
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). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. 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.