Bottom line
- Total investment $259K – $14.8M including a $27K franchise fee, 5.0% ongoing royalty.
- No Item 19 financial performance data disclosed — the franchisor chose not to publish revenue figures.
- Rated STRONG with a risk score of 46/100. SBA loan default rate of 0.0% across 552 loans (below the industry average).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Red Roof Inn unit return on the cash you put in?
Unlevered ROIC · per unit
1%
Below typical band (30–60%)
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.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
This franchisor did not disclose financial performance representations in Item 19, or our extractor could not parse them.
Item 20 · unit dynamics
The Growth Chart
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 phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
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.
Score breakdown · what drove the 46 / 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
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
98 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Red Roof Inn · FDD (2025) PDF