The Red CollectionFranchise Cost, Revenue & Review 2026
Data from FDD filing
FranchiseVerdict summary · 2026
A The Red Collection franchise requires a total initial investment of $221K – $1.6M, including a $35K franchise fee and an ongoing 4.5% royalty[2]. The 2025 FDD does not disclose unit-level revenue (no Item 19). Verdict grade: F. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $221K – $1.6M
- 13th pct Lodging
- Avg gross sales
- N/A
- 2nd pct Lodging
- Royalty
- 4.5%
- 4th pct Lodging
- Units
- 5
- 14th pct Lodging
- SBA default
- N/A
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
Franchised units fell from 5 to 3 over 3 years. Investigate why operators are leaving.
Bottom line
- Total investment $221K – $1.6M including a $35K franchise fee, 4.5% ongoing royalty.
- No Item 19 financial performance data disclosed. The franchisor chose not to publish revenue figures.
- Verdict F (Bottom Quintile) with a risk score of 100/100.
- Bankruptcy history disclosed in the FDD. Review Item 4 for details before proceeding.
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- The Red Collection, LLC
- Parent company
- Red Roof Franchising, LLC
- Incorporated in
- DE
- HQ
- 7815 Walton Parkway, New Albany, Ohio 43054
- Auditor
- Plante & Moran, PLLC
- Audited financials
- Franchisor revenue
- $92.0M
- vs $94.2M prior year
Overview
About
The Red Collection operates boutique hospitality properties (likely upscale hotel or vacation rental properties based on 'Gross Room Revenues' metric). Franchisees manage day-to-day operations including guest services, housekeeping, maintenance, marketing, and revenue optimization for branded properties under the franchisor's standards and quality controls.
- CEO
- Zack Gharib
- Headquarters
- OH
- Founded
- 2017
- FDD year
- 2025
- States available
- 3
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $35K | $35K |
| Working capital (3–6 mo) | $112K | $154K |
| Equipment, build-out, other | $74K | $1.4M |
| Total initial investment | $221K | $1.6M |
Source: The Red Collection 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $221K – $1.6M
- Better than avg vs category
- Liquid capital req'd
- $112K – $154K
- Better than avg vs category
- Franchise fee
- $35K – $35K
- Better than avg vs category
- Royalty
- 4.5%
- Gross Room Revenues · typical 6–8%
- Ad fund
- 3.0%
- typical 3–5%
- Total fee load
- 7.5%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 4.5% of gross sales |
| Marketing / ad fund | 3.0% of gross sales |
| Technology fee | $15K |
| Training fee | $1K |
| Transfer fee | $15K |
| Renewal fee | $50 |
| Total fee load | 7.5% of rev |
Financial Performance
This franchisor did not disclose financial performance representations in Item 19, or our extractor could not parse them.
vs Lodging averages
How The Red Collection Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 5
- Opened
- 1
- Last reporting year
- Closed
- 1
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 20.0%
- Company-owned
- 0
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (yr3)
- +0.0%
- Net unit change last year
- 3-yr CAGR
- +66.7%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 0
- Projected new
- 2
- Franchisor's next-year forecast
- Termination rate
- 20.0%
- Franchisor-initiated terminations
- Ceased ops
- 20.0%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 7 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.
No SBA loan data available for this brand.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Critical viability concerns: tiny 5-unit system, going concern status, active litigation pattern, zero financial disclosure, and recent collection actions signal systemic operational and financial distress.
Litigation (Item 3)
One pending franchisee lawsuit (HP Holding LLC v. Red Roof Inns, Inc.) alleging breach of contract, tortious interference, and NJFPA violations; one concluded Maryland Securities Division inquiry into franchise activities
Bankruptcy (Item 4)
Disclosed in last 7 years
In re ASTECH Engineered Products, Inc., Case No. 22-10635-BLS (Bankr. Del.), Chapter 11 filing on 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 100 / 100 rating
- 01HIGHGoing Concern status is FALSE — indicates potential financial instability or operational viability questions at corporate level
- 02MINOROnly 5 units system-wide with unknown/likely stagnant growth — minimal scale and no evidence of expansion momentum
- 03MINORThree active legal disputes (1 pending breach/tortious interference, 2 collection actions in 2024) plus concluded Maryland franchise registration violations — pattern of compliance and relationship issues
- 04MEDZero financial transparency — no Item 19 average revenue or net income disclosed, making ROI analysis impossible
- 05MEDHigh investment range ($220K–$1.57M) combined with 4.5% royalty with no performance benchmarks or disclosed unit economics
- 06MINORRecent collection actions by affiliate against franchisees in 2024 suggest cash flow stress among operators and potential franchisor financial pressure
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 rights | 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
One pending franchisee lawsuit (HP Holding LLC v. Red Roof Inns, Inc.) alleging breach of contract, tortious interference, and NJFPA violations; one concluded Maryland Securities Division inquiry into franchise activities
Items 10, 11
Training & Operations
- Classroom training
- 37 hrs
- On-the-job training
- 7 hrs
- Training location
- Mixed (Live Webinar, On Demand Learning Module, Your Hotel)
- Ongoing training
- Required
- Field support
- 9 hrs/yr
- On-site visits per year
- POS system
- Reservation Platform / PMS
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Reservation Platform / PMS
Item 20 · call current owners
Franchisee Contacts
11 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
The Red Collection · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a The Red Collection franchise?
The total investment to open a The Red Collection franchise ranges from $221K – $1.6M, with an initial franchise fee of $35K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do The Red Collection franchise owners earn?
The Red Collection 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 The Red Collection's franchise failure rate?
SBA 7(a) loan charge-off data is not available for The Red Collection (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many The Red Collection franchise locations are there?
As of their most recent FDD filing, The Red Collection has 5 total units in the United States, including 5 franchised units and 0 company-owned units. 1 new units were opened in the latest reporting year.
Is The Red Collection a good franchise to buy?
FranchiseVerdict rates The Red Collection as a F-grade franchise with a risk score of 100 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
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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.