Clarion Hotel Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$311,845 - $2,728,595
Franchise Fee
$5,000
Min Cash Required
$15,000
Total US Locations
6,425
Business Summary
Choice Hotels International, Inc. offers franchises for hotels under its CLARION and CLARION POINTE brands. CLARION hotels provide guests with quality service, amenities, and an inviting atmosphere at an affordable price, typically featuring free high-speed internet, and often including a full-service restaurant, swimming pool, and fitness center. This brand includes various types like CLARION INN for smaller markets, CLARION INN & SUITES with more suites, CLARION HOTEL for larger markets, CLARION RESORT for upscale destination locations, and CLARION SUITES for all-suite accommodations. CLARION POINTE hotels focus on modern upgrades, clean rooms, and efficient technology, offering amenities such as free premium coffee/tea, a healthy breakfast, and options for beer and wine purchases, alongside updated fitness facilities, free high-speed internet, and advanced in-room entertainment. The franchise grants the right to construct and operate hotels using these distinct brand identities and operating systems.
Corporate History
Choice Hotels International, Inc. began its operations in 1939 when seven independent motel owners in Florida came together to create Quality Courts United, which is considered the nation's first hotel chain. This group formalized its relationship in 1941. In January 1963, the organization officially became a for-profit corporation under the name Quality Courts Motels, Inc., and later changed its name to Choice Hotels International, Inc. on July 25, 1990. The company has since grown by developing additional hotel brands and expanding into new markets, including international operations through subsidiaries since around 1958. In 2013, Choice Hotels International, Inc. established SkyTouch Solutions, LLC, to offer cloud-based technology products to hoteliers. A significant milestone was the acquisition of Radisson Hospitality, LLC, and its subsidiaries on August 11, 2022, which added several prominent hotel brands to the Choice Hotels International, Inc. portfolio. While Choice Hotels International, Inc. itself has not owned or operated CLARION or CLARION POINTE hotels, a former affiliate, Sunburst Hospitality Corporation, did so until 1997.
Financial Overview
Investment Range
$311,845 - $2,728,595
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$83,200
Minimum Cash Required
$15,000
Royalty %
5.5%
Marketing %
3.25%
Equipment Costs (Low)
$126,000
Equipment Costs (High)
$1,881,600
Working Capital
$100,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Choice Hotels International, Inc. received an unqualified audit opinion for its financial statements, confirming they are presented fairly. A significant detail regarding its financial health is that the company reported negative total shareholders' equity of approximately $45 million as of December 31, 2024, meaning its total liabilities exceeded its total assets. Despite this, Choice Hotels International, Inc. maintained strong operating cash flows, generating over $319 million in 2024. The company carries substantial long-term debt, totaling over $1.7 billion in 2024. Its cash outflows from investing activities are directed towards property and affiliate investments, while financing activities show outflows primarily from treasury stock repurchases and dividend payments. The independent auditor highlighted the complexity of accounting for the Choice Privileges Loyalty Program as a critical audit matter, which is an accounting complexity rather than an immediate concern about the company's financial stability or ability to continue operations.
Financing Details
Choice Hotels International, Inc. offers several financing options. For the affiliation fee, Choice Hotels International, Inc. may, at its sole discretion and based on credit approval, allow franchisees to finance the fee without interest via a promissory note, with the full amount typically due within three months. If defaulted, an 18% annual interest rate applies (or 10% in California). Choice Hotels International, Inc. also provides "Selected Capital Support" loans for properties deemed strategically important. These loans are usually forgivable over 10 or 20 years on a straight-line basis, provided the franchisee does not default. Interest only accrues upon default (at prime plus 2%, or 10% maximum in California). Additionally, an Incentive Program is available for underrepresented entrepreneurs and veterans, offering $2,500 per room, up to a maximum of $250,000 for a CLARION or $175,000 for a CLARION POINTE hotel. This incentive is structured as a 10-year forgivable promissory note, paid after the hotel opens, with no interest unless defaulted (prime plus 2%). A 5-year, 50% reduced incentive option is also available. For franchisees re-licensing an existing CLARION hotel who qualify for the Incentive Program, Choice Hotels International, Inc. offers a 50% discount on the affiliation fee. While Choice Hotels International, Inc. does not directly finance other costs, it has agreements with third-party lenders like PMC Commercial Trust, Balboa Capital Corporation, and Ascentium Capital LLC, who may offer conventional and SBA loans for various startup and operational expenses. Choice Hotels International, Inc. receives annual flat fees from these lenders for referring franchisees.
Performance Metrics
Total US Locations
6,425
Franchised Units
6,404
Corporate Units
21
Franchising Since
1987
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
89
Litigation Summary
Choice Hotels International, Inc. has a significant and active legal history. As of December 31, 2024, Choice Hotels International, Inc. faces several pending lawsuits. These include a class action in Canada regarding allegedly wrongfully collected destination marketing fees, a case from 2020 alleging discriminatory and anti-competitive practices and breach of contract that is currently stayed pending arbitration, and a 2023 case claiming breach of contract and misappropriation of guest data that is awaiting a court decision. A more recent 2024 case alleges a fraudulent rebate scheme, misuse of fees, misrepresentation of the system, and breach of contract, with a motion to compel arbitration currently pending. In the most recent fiscal year, Choice Hotels International, Inc. initiated 81 arbitration or court proceedings against various franchisees to recover unpaid royalties, liquidated damages, and other debts. Regarding resolved litigation, in March 2024, a final judgment was entered against Choice Hotels International, Inc. for approximately $779,000 in a case involving Highmark Lodging, LLC. In January 2024, Choice Hotels International, Inc. had a judgment confirmed for attorney's fees and costs against Dahya Investments Incorporated. Another case, Choice Hotels International, Inc. v. DIP Hospitality, LLC, saw Choice Hotels International, Inc. win claims for unpaid fees, but the franchisee won a wrongful termination claim for over $4.4 million plus fees and costs in July 2024. Overall, Choice Hotels International, Inc. is frequently involved in disputes with franchisees, often related to unpaid fees and contract breaches, with some cases resulting in significant awards against the franchisor.
Bankruptcy History
Choice Hotels International, Inc. has no reportable bankruptcy history for itself or its key personnel.
Agreement Terms
Initial Term
20 years
Renewal Conditions
The Clarion franchise agreement does not include a provision for renewal or extension of the term after the initial 20-year term expires.
Training & Support Program
Franchisor Assistance
Choice Hotels International, Inc. offers comprehensive assistance to its CLARION and CLARION POINTE franchisees. Before opening, Choice Hotels International, Inc. helps with site selection approval, reviews and provides feedback on architectural and design plans for new construction or major renovations, and can offer additional consultation services for building, upgrading, maintaining, operating, and marketing the hotel. An Onboarding Project Director and Opening Services Manager are assigned to guide franchisees through the pre-opening phase, ensuring contractual milestones are met, and helping the hotel prepare to meet brand standards for its first Quality Assurance Review. After opening, ongoing support includes a quality assurance program with regular visits and guest satisfaction surveys to evaluate compliance with brand standards. Choice Hotels International, Inc. also operates an advance reservation system and manages national, international, and regional advertising and marketing campaigns, funded by the Marketing and Reservation Fee. Franchisees utilize the proprietary choiceADVANTAGE® property management system, which comes with 24/7 remote support and regular updates. Additionally, Choice Hotels International, Inc. provides an Educational Resources Program for ongoing training and reviews requests for changes in the hotel's room count.
Initial Training Hours
47
Training Location
Initial in-person training for Choice Onboard is held at Choice Hotels International, Inc.'s corporate locations in North Bethesda, Maryland, or Scottsdale, Arizona. Mandatory Hospitality Operations Success Training (HOST) is offered virtually with internet access.
Ongoing Support
Choice Hotels International, Inc. provides comprehensive ongoing support for its CLARION and CLARION POINTE franchisees after opening. This includes a quality assurance program with periodic visits to the hotel and guest satisfaction surveys to evaluate compliance with brand standards, offering advice on required changes, and implementing consequences for non-compliance. Choice Hotels International, Inc. also manages an advance reservation system and conducts national, international, and regional advertising and marketing campaigns, funded by the monthly Marketing and Reservation Fee. Franchisees receive continuous remote support for the choiceADVANTAGE® property management software, along with software enhancements, updates, and online training bulletins via ChoiceU.com. Franchisees must also participate in the annual Educational Resources Program, providing unlimited access to online training. Optional regional workshops and additional training programs are available throughout the year. Choice Hotels International, Inc. also requires franchisees to install a remote access feature for the choiceADVANTAGE® system and to refresh their dedicated hardware every 48 months.
Franchise Requirements
Ideal Candidate Profile
Choice Hotels International, Inc. is looking for franchisees who meet its current qualifications, including a standard credit review. Ideal candidates are majority owners who are actively involved in the business. The franchise encourages individuals from diverse backgrounds or honorably discharged military veterans who can contribute to broadening access to the hospitality industry. For transfers, candidates must demonstrate strong educational, managerial, and business standards, possess good moral character, a solid business reputation and credit rating, and have the necessary experience, aptitude, and financial resources to operate a CLARION or CLARION POINTE hotel successfully.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Absentee Allowed
Territory Type
Limited
Territory Size Requirements
Clarion franchise territories are site-specific, but Choice Hotels International, Inc. defines an "Area of Enhanced Protection" for each hotel, which varies in radial miles depending on the hotel's market category, such as Primary/Airport, Highway, Urban, Resort, Suburban, Small Town, Metro, Secondary, or Tertiary. For instance, a hotel in a Primary Urban market might have a 0.5-mile radius, while one in a Tertiary Highway market might have a 7-mile radius for this protection. Additionally, franchisees can object to new same-brand franchise applications that are proposed to be located within a specified notification radius, which is larger, ranging from 7 miles for Primary markets to 15 miles for Tertiary markets.
Staffing Notes
Choice Hotels International, Inc. does not require the franchisee to personally participate in the day-to-day operation of the CLARION or CLARION POINTE hotel. However, it is mandatory to have a certified General Manager at the hotel. Choice Hotels International, Inc. provides its Certified General Manager training through the Hospitality Operations Success Training (HOST) program, and all new or replacement General Managers must successfully complete this certification.