FranchiseVerdict
Travelodge logo
D70/100FDD 2024

Travelodge — Litigation & Risk

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

Back to overview

Elevated Risk

14 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
14
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
70 / 100
FranchiseVerdict composite
Rating
CAUTION
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
243
Government-backed loans issued
Default rate
8.2%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
19 loans
Loans charged off or defaulted
Total loan volume
$280.5M
Avg loan size
$1.2M
Participating lenders
97

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
No
Franchisor can match any purchase offer when you try to sell
Governing law
New Jersey
State whose law governs disputes — relevant if you're not based there

What drove the 70/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-0.3% YoY) indicates system contraction despite 20-year terms
  2. 02MINORMultiple class action lawsuits involving marketing fees and price fixing suggest franchisor practices under legal scrutiny
  3. 03MINORFTC/FFC regulatory actions on acquisitions raise corporate governance and antitrust concerns
  4. 04HIGHSignificant litigation with franchisees over non-payment and contract breaches indicates franchisor-franchisee relationship deterioration
  5. 05MEDNo disclosed average revenue or net income data (no Item 19) prevents assessment of unit-level profitability
  6. 06MINORWide investment range ($218K-$10.9M) suggests unclear unit economics or multiple hotel types with different viability
  7. 07MINOR5% royalty on gross room revenue is high-friction during low-occupancy periods

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.