Econo Lodge Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$185,645 - $1,047,895
Franchise Fee
$2,500
Total US Locations
643
Business Summary
ECONO LODGE offers the right to construct and operate a hotel under its brand name, ECONO LODGE or ECONO LODGE INN & SUITES. These hotels aim to provide a comfortable and valuable stay for both business and leisure travelers. An ECONO LODGE hotel with at least 10% suites may operate as an ECONO LODGE INN & SUITES. The franchise agreement allows the use of the ECONO LODGE trade name, service marks, distinctive identity, trade dress, methods, and system for conducting a hotel business at the franchised location.
Corporate History
Choice Hotels International, Inc. began its business in 1939 when seven independent motel owners in Florida formed Quality Courts United, creating the nation's first hotel chain focused on quality standards and guest referrals. In January 1963, the organization formally became a for-profit corporation operating under the name Quality Courts Motels, Inc. The company expanded its franchise system by developing additional hotel brands and entering new markets, eventually changing its corporate name to Choice Hotels International, Inc. on July 25, 1990, a name it has held since October 15, 1997. Its indirect subsidiaries have been involved in international franchise operations since approximately 1958. In 2013, Choice Hotels International, Inc. established SkyTouch Solutions, LLC, a subsidiary dedicated to developing and marketing cloud-based technology products for hoteliers. On August 11, 2022, Choice Hotels International, Inc. acquired Radisson Hospitality, LLC and its subsidiaries, further expanding its portfolio with brands like Radisson and Country Inn & Suites.
Financial Overview
Investment Range
$185,645 - $1,047,895
Franchise Fee (Low)
$2,500
Franchise Fee (High)
$39,500
Royalty %
5%
Marketing %
3.5%
Equipment Costs (Low)
$91,800
Equipment Costs (High)
$646,300
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financing Details
Choice Hotels International, Inc. offers several direct and indirect financing options for ECONO LODGE franchisees. Directly, Choice Hotels International, Inc. may finance the affiliation fee without interest, typically requiring a lump sum payment within three months of signing the promissory note. Upon credit approval, Choice Hotels International, Inc. may also provide selected capital support for properties deemed strategically important. This capital support is usually structured as a forgivable promissory note over 10 or 20 years, with forgiveness tied to the franchisee maintaining good standing under the franchise agreement. If a default occurs, outstanding amounts bear interest at prime plus 2%. Additionally, an Incentive Program is offered for underrepresented entrepreneurs and veterans. For an ECONO LODGE hotel, this incentive is $1,000 per room, up to a maximum of $75,000, delivered via a 10-year forgivable promissory note. A 5-year amortization option is available for 50% of the incentive. These incentive notes are forgiven straight-line over their term if the franchisee remains in good standing, but accrue interest at prime plus 2% (or prime plus 7% for delayed payments post-default) if a default occurs. Qualifying franchisees re-licensing an existing ECONO LODGE hotel receive a 50% discount on the affiliation fee. For indirect financing, Choice Hotels International, Inc. has non-exclusive agreements with third-party lenders like PMC Commercial Trust, Balboa Capital Corporation, and Ascentium Capital LLC, who may offer conventional and SBA financing for various startup and operational costs.
Performance Metrics
Total US Locations
643
Franchised Units
643
Corporate Units
0
Franchising Since
1990
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
110
Litigation Summary
Choice Hotels International, Inc. has a substantial litigation history, including ongoing and recently resolved cases. Four lawsuits are currently pending. One, filed in 2014, alleges wrongful collection of destination marketing fees by Canadian hotels, and Choice Hotels is seeking contribution and indemnification from some franchisees. Another, filed in 2020 by approximately ninety current and former franchisees, alleges discriminatory and anti-competitive practices, violations of the Racketeer Influenced and Corrupt Organizations Act, Sherman Act, Civil Rights Act, and various state franchise laws by Choice Hotels International, Inc. and its Owner Council. This case, which seeks unspecified actual and punitive damages, is currently stayed pending individual arbitration. Two other pending cases, filed in 2023 and 2024, involve allegations such as breached license agreements, misuse of guest data, fraudulent rebate schemes, and contract violations. In the past year, Choice Hotels International, Inc. also initiated over one hundred arbitration or district court actions against franchisees to recover unpaid royalties, liquidated damages, and other debts. Additionally, four cases initiated before 2024 were resolved in 2024. These include a settlement where Choice Hotels International, Inc. paid $85,000 to a former franchisee. Another arbitration resulted in an award against Choice Hotels International, Inc. for approximately $779,398.40 in favor of a franchisee. In a separate case, while Choice Hotels International, Inc. was awarded $882 for breach of contract, the franchisee was ordered to pay Choice Hotels International, Inc. $603,483.00 for attorney's fees. A final arbitration involved Choice Hotels International, Inc. prevailing on claims for unpaid fees ($256,051.37) but a franchisee succeeding on a wrongful termination claim, being awarded over $4.4 million and approximately $430,125.87 in fees and costs.
Bankruptcy History
Choice Hotels International, Inc. has no bankruptcy information required to be disclosed in this Item.
Agreement Terms
Initial Term
20 years
Renewal Conditions
ECONO LODGE franchisees do not have the right to renew their franchise agreement after the initial 20-year term expires, as there is no provision for renewal in the agreement.
Training & Support Program
Franchisor Assistance
Choice Hotels International, Inc. provides extensive support to ECONO LODGE franchisees, starting with pre-opening assistance that includes site selection approval, review of construction and renovation plans, and guidance from an Onboarding Project Director and Opening Services Manager to help meet milestones and brand standards. Mandatory initial training includes a 3-day Choice Onboard orientation program held in North Bethesda, Maryland, and a virtual Hospitality Operations Success Training (HOST) program covering online lessons, workshops, and exams. Additional virtual training is provided for re-licensed hotels. Post-opening, Choice Hotels International, Inc. administers a quality assurance program with periodic hotel visits and guest satisfaction surveys, offering advice on improvements and addressing non-compliance. Ongoing marketing and reservation support is provided through national, international, and regional advertising, promotional programs, and access to Choice Hotels International, Inc.'s advance reservation system, funded by a monthly Marketing and Reservation Fee. Franchisees can also participate in voluntary regional marketing cooperatives. Furthermore, Choice Hotels International, Inc. offers comprehensive computer hardware and software support for the choiceADVANTAGE® property management system, including 24/7 remote assistance, software enhancements and updates, remote configuration, installation services, and online training. An annual Educational Resources Program provides unlimited access to online training modules, and additional optional training programs are available throughout the year.
Initial Training Hours
61
Training Location
North Bethesda, Maryland, and virtual
Ongoing Support
After opening, ECONO LODGE franchisees receive continuous support from Choice Hotels International, Inc. This includes a quality assurance program with regular visits and guest satisfaction surveys, offering guidance on maintaining brand standards and addressing any deficiencies. Choice Hotels International, Inc. manages marketing and reservation services, utilizing a monthly fee to fund national, international, and regional advertising, promotional programs, publicity, and market research. Franchisees also have the option to participate in regional marketing cooperatives. Additionally, ongoing remote technical support for the choiceADVANTAGE® property management system is available 24/7, along with software enhancements, updates, remote configuration, and online training resources on ChoiceU.com. Franchisees are required to update their hardware for this system every 48 months or upon warranty expiration. An annual Educational Resources Program provides unlimited access to online learning, and other optional training programs are offered throughout the year.
Franchise Requirements
Ideal Candidate Profile
Choice Hotels International, Inc. seeks franchisees for ECONO LODGE hotels who demonstrate strong business acumen, good moral character, a reputable business background, and a solid credit rating. Ideal candidates should possess the experience, aptitude, and financial capacity necessary to effectively construct, renovate, and operate a hotel according to Choice Hotels International, Inc.'s standards. While direct personal participation in the day-to-day operation is not mandated, franchisees must ensure a certified General Manager is at their hotel. For those interested in incentive programs, Choice Hotels International, Inc. is particularly looking for majority owners who are actively involved in the deal process and whose background contributes to broadening access to the franchise system and hospitality industry, including honorably discharged veterans.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
Each ECONO LODGE hotel is granted an Area of Enhanced Protection, defined in radial miles based on its market category (Primary/Airport, Secondary, or Tertiary) derived from Smith Travel Research data. For Primary/Airport markets, the area is between 1 to 2.5 miles; for Secondary markets, it's 5 miles; and for Tertiary markets, it's 7 miles (except Resort in Tertiary which is 5 miles). Within this area, Choice Hotels International, Inc. generally will not grant another same-brand franchise, unless the market is inadequately served and an incremental impact study shows less than a 5% revenue reduction. Franchisees also have objection rights for proposed same-brand hotels outside their Area of Enhanced Protection, with notification areas ranging from 7 miles for Primary markets, 10 miles for Secondary, and 15 miles for Tertiary markets.
Staffing Notes
ECONO LODGE hotels must have a certified General Manager. Choice Hotels International, Inc. also provides training for General Managers, Assistant General Managers, front office managers, and front desk staff, indicating these are expected staffing roles for hotel operations.