Red Roof InnFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A Red Roof Inn franchise requires a total initial investment of $259K – $14.8M, 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]. Verdict grade: B. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $259K – $14.8M
- 16th pct Lodging
- Avg gross sales
- N/A
- 2nd pct Lodging
- Royalty
- 5.0%
- 4th pct Lodging
- Units
- 619
- 49th pct Lodging
- SBA default
- 5.5%
- system-wide median varies by category
Quick verdict · Lodging · color = vs category peers
Green = >15% above Lodging avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Franchising since 1996. Systems this mature have refined operations and brand recognition.
Franchised units fell from 584 to 546 over 3 years. Investigate why operators are leaving.
Bottom line
- Total investment $259K – $14.8M including a $27K franchise fee, 5.0% ongoing royalty.
- Item 19 discloses "Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution)" rather than annual gross sales, so unit revenue is not directly comparable.
- Verdict B (Above Average) with a risk score of 56/100. 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, 2010–2024).
- Bankruptcy history disclosed in the FDD. Review Item 4 for details before proceeding.
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- Red Roof Franchising, LLC
- Parent company
- RRF Holding Company, LLC
- Incorporated in
- DE
- 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
Franchisees operate budget-tier hotel properties under the Red Roof Inn brand, managing daily front-desk operations, housekeeping, maintenance, and guest services. Operators handle occupancy management, revenue optimization, and brand standard compliance while paying 5% royalties on gross room revenues to the franchisor.
- CEO
- Zack Gharib
- Headquarters
- OH
- Founded
- 1973
- FDD year
- 2025
- States available
- 38
FDD Item 7 · 2025 filing · 20 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 – $14.8M
- Better than avg vs category
- Liquid capital req'd
- $112K – $154K
- Better than avg vs category
- Franchise fee
- $27K – $27K
- Better than avg 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 |
Financial Performance
This brand's FDD disclosed "Performance Metrics (ADR, Occupancy, RevPAR, Brand Contribution)" in Item 19 rather than annual gross sales. This metric cannot be directly compared across brands, so we omit it from rankings.
vs Lodging averages
How Red Roof Inn Compares
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 (yr3)
- +4.1%
- Net unit change last year
- 3-yr CAGR
- +7.0%
- 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 · 11 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)
- 98.5%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 106
- Defaults
- 14
Vintage analysis
Red Roof Inn charge-off rate by loan vintage
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.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Red Roof Inn presents moderate-to-cautionary risk due to lack of financial transparency (no Item 19), regulatory violations, pending litigation, and signs of franchisee financial stress, despite established brand and protected territories.
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)
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 56 / 100 rating
- 01MINORNo Item 19 financial performance disclosure — impossible to validate ROI claims or benchmark profitability
- 02MINORModest unit growth of 4.1% YoY suggests stagnant market position in budget hotel segment experiencing consolidation
- 03HIGHPending litigation from former franchisee alleging franchise agreement breaches and tortious interference indicates potential systemic franchisor-franchisee disputes
- 04MINORMaryland regulatory action and consent order for franchise registration/disclosure violations raises compliance and governance concerns
- 05MINORTwo collection actions filed by franchisor against franchisees in 2024 signals potential franchisee financial distress or payment disputes
- 06MINORWide investment range ($259K–$14.8M) lacks transparency on typical initial capex and working capital requirements
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 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
98 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 – $14.8M, 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 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 B-grade franchise with a risk score of 56 out of 100, 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
Are you the franchisor?
If you represent Red Roof Inn, you can request corrections or provide updated information.
Claim this brandOther Lodging franchises
Compare similar franchise opportunities in the Lodging category
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.