Extended Stay America Select Suites Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$195,146 - $13,285,766
Franchise Fee
$40,000
Total US Locations
211
Business Summary
EXTENDED STAY AMERICA SELECT SUITES® offers franchises for hotels that provide extended stay lodging services. These hotels are designed for self-sufficient, value-conscious guests seeking flexible and affordable stay terms in a guest-centric environment. The hotels feature fully furnished one-bedroom suites with free WiFi and flat screen TVs, along with on-site guest laundry. While guests can purchase a cookware kit, the hotels do not offer breakfast or a breakfast area. EXTENDED STAY AMERICA SELECT SUITES hotels cater to a diverse clientele including business and leisure travelers, professionals on temporary assignments, and individuals temporarily relocating or purchasing homes.
Corporate History
ESH Strategies Franchise LLC, operating under the EXTENDED STAY AMERICA® and EXTENDED STAY AMERICA SELECT SUITES names, was formed as a Delaware limited liability company on September 16, 2010. The company began operating in the hotel business in early 2016. It started offering franchises for EXTENDED STAY AMERICA® hotels from August 2017 through March 2021. In March 2021, the mark was modified, and the company began offering franchises solely under the EXTENDED STAY AMERICA SUITES® brand. In the same month, EXTENDED STAY AMERICA PREMIER SUITES®, a brand featuring upgraded amenities, was also launched for franchising. The EXTENDED STAY AMERICA SELECT SUITES brand began offering franchises in September 2022. ESH Strategies Franchise LLC has never owned or operated hotels under these specific franchised brands; its affiliates own and operate these properties.
Financial Overview
Investment Range
$195,146 - $13,285,766
Franchise Fee (Low)
$40,000
Franchise Fee (High)
$50,000
Minimum Net Worth
$6,165,500
Royalty %
5.5%
Marketing %
4.5%
Equipment Costs (Low)
$98,746
Equipment Costs (High)
$1,187,266
Working Capital
$212,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The independent auditor's report for Extended Stay America Select Suites includes an Emphasis of Matter noting significant related party transactions with affiliated entities. These transactions are considered fundamental to understanding the financial statements, and the financial conditions might differ if the company operated without them. However, the auditor's opinion on the financial statements is not modified with respect to this matter, indicating the financial statements present fairly. The company's financial health has shown improvement, moving from a net loss of $2,172 thousand in 2023 to a net income of $1,537 thousand in 2024. Cash and cash equivalents have increased from $8,537 thousand in 2023 to $9,170 thousand in 2024. Total liabilities decreased significantly from $13,582 thousand in 2023 to $10,983 thousand in 2024, and member's capital increased from $6,571 thousand to $8,195 thousand over the same period. No going concern qualification was noted by the auditors.
Financing Details
Extended Stay America Select Suites does not offer any direct or indirect financing options to its franchisees. The franchisor also does not guarantee any notes, leases, or other financial obligations for its franchisees.
Performance Metrics
Total US Locations
211
Franchised Units
5
Corporate Units
206
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
EXTENDED STAY AMERICA SELECT SUITES has been involved in recent litigation. As of September 2024, three antitrust class action complaints were filed against Extended Stay America and several other hotel companies. These lawsuits allege that the companies violated the Sherman Act by using a common revenue management algorithm to set guest room rates and occupancy levels, purportedly leading to increased rates and artificial suppression of occupancy. These cases were later consolidated under "In re Extended Stay Hotel Antitrust Litigation" and transferred to a U.S. District Court in California. Briefing on motions to dismiss for this consolidated case is currently stayed pending a decision in a separate but similar class action. Extended Stay America denies the allegations and intends to vigorously defend against these claims. Additionally, a prior class action lawsuit, "Latreass "Lisa" Brittian v. ESA Management LLC, et al.", was filed in December 2022 (amended in January 2024) against Extended Stay America's affiliates and a franchisee. This case alleged unfair practices regarding denied accommodations and failure to provide refunds. This class action was confidentially settled for $100,000 in July 2024 and subsequently dismissed in August 2024.
Bankruptcy History
Extended Stay America Select Suites has no bankruptcy history that is required to be disclosed in this Franchise Disclosure Document.
Agreement Terms
Initial Term
20 years
Renewal Conditions
The franchise agreement for EXTENDED STAY AMERICA SELECT SUITES does not provide franchisees with any right to renew or extend the term of their agreement.
Training & Support Program
Franchisor Assistance
EXTENDED STAY AMERICA SELECT SUITES offers a range of assistance to its franchisees. Before a hotel opens, the franchisor reviews site information, construction or renovation plans, and provides up to three site visits to monitor progress. It also conducts up to two site visits to certify the hotel's information technology infrastructure and performs a final pre-opening inspection. Franchisees are also provided access to the brand's Standards Manual. For training, the franchisor requires attendance at a New Owner Orientation, a General Manager Certification program, and a Pre-Opening Onsite Training (which may be waived if the franchisee demonstrates sufficient training capability). There is also a Service Culture Training course for all associates. After opening, EXTENDED STAY AMERICA SELECT SUITES may designate suppliers, offer optional consultation and advice services, conduct unannounced inspections and audits to ensure compliance with standards, and review all marketing materials. The franchisor maintains the ESA Website and a mobile app to advertise and promote brand hotels and reserves the right to make changes to the System and Standards. Franchisees must use specific property management, revenue management, reservation, and credit card processing systems. The franchisor also performs digital and email marketing efforts funded through the System Services Fee, and franchisees are not permitted to conduct their own digital or email marketing.
Initial Training Hours
39
Training Location
Charlotte, NC, Online or in Charlotte, NC, and Franchisee's Hotel
Ongoing Support
EXTENDED STAY AMERICA SELECT SUITES provides ongoing support to its franchisees after their hotel opens. This includes designating and approving suppliers for various operating items and offering optional consultation and advice services on hotel operations. The franchisor regularly conducts physical and electronic inspections and audits of the hotel, its operations, and financial records to ensure compliance with brand standards and the franchise agreement. They also review and approve all franchisee-created marketing materials. The franchisor maintains the ESA Website and mobile application to advertise and promote the brand hotels, and they use the System Services Fee to fund ongoing digital and email marketing efforts for the brand, with franchisees prohibited from conducting their own digital or email marketing. Additionally, franchisees are required to use and maintain specific property management, revenue management, and centralized reservation systems, along with credit card terminals and telecommunications infrastructure, for which the franchisor specifies approved suppliers and project management. Ongoing training can also include optional Functional Path Training modules via the online learning management system, ESU Online, and remedial training may be required if a hotel fails a Quality Assurance inspection.
Franchise Requirements
Ideal Candidate Profile
EXTENDED STAY AMERICA SELECT SUITES is seeking franchisees or management companies who meet the franchisor's minimum qualifications and possess managerial skills or operational capacity to operate hotels in accordance with brand standards. Candidates must ensure their personnel attend and satisfactorily complete all required brand standard training programs. Furthermore, ideal candidates should not be competitors or sanctioned persons. The franchisor may require a franchisee to hire a management company if the franchisee does not have sufficient hotel management experience or fails to manage the hotel to professional standards. Franchisees should also demonstrate relevant business experience and the ability to operate as an independent business owner.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Protected
Staffing Notes
EXTENDED STAY AMERICA SELECT SUITES requires that either the franchisee or an approved Management Company be responsible for managing the hotel. They must employ a full-time, qualified, and competent general manager who has successfully completed the General Manager Certification program. The franchisor may approve a multi-unit general manager to supervise multiple hotels. If the hotel's general manager fails to meet quality assurance requirements, the franchisor may require the appointment of a new general manager. All hotel staff are required to complete a mandatory one-hour ESU Online Service Culture Training course within 90 days of their hire date, which introduces them to the brand's service culture. Franchisees are solely responsible for hiring, terminating, and supervising their hotel staff, and are considered the sole employer of these employees. The franchisor exercises no direct control over employment policies or decisions. Additionally, franchisees must provide and facilitate human trafficking awareness training to each hotel associate at least once per calendar year.