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A45/100FDD 2025

Red Roof Inn — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
45 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
361
Government-backed loans issued
Default rate
1.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$819.6M
Avg loan size
$2.3M
Participating lenders
101

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
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
Ohio
State whose law governs disputes — relevant if you're not based there

What drove the 45/100 rating

Risk Score Breakdown

  1. 01MINORNo Item 19 financial performance disclosure — impossible to validate ROI claims or benchmark profitability
  2. 02MINORModest unit growth of 4.1% YoY suggests stagnant market position in budget hotel segment experiencing consolidation
  3. 03HIGHPending litigation from former franchisee alleging franchise agreement breaches and tortious interference indicates potential systemic franchisor-franchisee disputes
  4. 04MINORMaryland regulatory action and consent order for franchise registration/disclosure violations raises compliance and governance concerns
  5. 05MINORTwo collection actions filed by franchisor against franchisees in 2024 signals potential franchisee financial distress or payment disputes
  6. 06MINORWide investment range ($259K–$14.8M) lacks transparency on typical initial capex and working capital requirements

Severity inferred from FDD text — not a regulatory or legal classification

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.