Magnuson Hotels Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$175,000 - $400,000
Franchise Fee
$10,000
Min Cash Required
$150,000
Total US Locations
11
Business Summary
Magnuson Franchising, LLC offers franchises to existing hotel operators who want to convert their current hotel into a "Magnuson Grand" or "Magnuson Hotels" branded hotel. Magnuson Hotels manages the listing of guest rooms on various online travel agents and global distribution systems, and the hotels operate using the Magnuson proprietary system and brand standards.
Corporate History
Magnuson Company, L.L.C., the parent company of Magnuson Franchising, LLC, co-founded the Magnuson Hotels brand in 2002. Magnuson Franchising, LLC itself was formed in March 2021 as a Wyoming limited liability company and began offering franchises for Branded Hotels in January 2022.
Financial Overview
Investment Range
$175,000 - $400,000
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$10,000
Minimum Cash Required
$150,000
Royalty %
8%
Equipment Costs (Low)
$3,000
Equipment Costs (High)
$40,000
Working Capital
$225,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Magnuson Franchising, LLC's financial condition, as reflected in its financial statements, raises concerns about its ability to provide services and support to franchisees. The company has relatively low member's equity and cash balances.
Financing Details
Magnuson Franchising, LLC does not offer any direct or indirect financing to franchisees. It also does not guarantee any of the franchisee's obligations or provide any financing to hotel owners. Franchisees will need to arrange their own funding.
Performance Metrics
Total US Locations
11
Franchised Units
11
Corporate Units
0
Franchising Since
2022
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
1
Litigation Summary
Magnuson Franchising, LLC has one disclosed litigation. In 2020, the Washington Department of Financial Institutions issued a consent order against Magnuson Company, L.L.C., the franchisor's parent company. The Department found that Magnuson Company had sold franchises without providing franchise disclosure documents or registering with the Department. Magnuson Company was directed to pay $2,500 in investigative costs and to stop sales of franchises that violate the Washington Franchise Investment Protection Act. Other than this action, Magnuson Franchising, LLC has no other litigation to disclose.
Bankruptcy History
Magnuson Franchising, LLC has no bankruptcy history to report.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew, Magnuson Franchising, LLC franchisees and their owners must comply with all terms of their franchise agreements and related documents, sign a new franchise agreement (which may have materially different terms), sign a general release of claims, and bring their hotel into compliance with the then-current brand standards for new Magnuson-branded hotels.
Training & Support Program
Franchisor Assistance
Before opening, Magnuson Franchising, LLC provides franchisees with a Brand Standards Manual, makes a revenue manager available to support strategies for optimizing rates, inventory, and reviews (though franchisees make the final decisions), and reviews and approves the conversion of the existing hotel, including signage and photographs. During operation, Magnuson Franchising, LLC provides access to its Magnuson Cloud PMS (or an approved PMS), lists guest rooms on Third-Party Distribution Channels, continues to offer revenue manager support, provides the Brand Standards Manual, and grants the right to use the Licensed Brand and System. The franchisor may also designate minimum or maximum prices for services.
Ongoing Support
During operation, Magnuson Franchising, LLC provides franchisees with access to the Magnuson Cloud PMS or an approved property management system, lists guest rooms on various Third-Party Distribution Channels that it selects, and continues to make a revenue manager available to support strategies for optimizing rates, inventory, and reviews for their hotel (though the franchisee retains final decision-making authority). The franchisor also continues to provide the Brand Standards Manual and the right to use the Licensed Brand and System. The franchisor may also designate minimum or maximum prices for products and services.
Franchise Requirements
Ideal Candidate Profile
Magnuson Franchising, LLC seeks qualified individuals who already own and operate a hotel property and wish to convert it to a Magnuson Grand or Magnuson Hotels brand. The franchisor evaluates potential franchisees based on criteria such as the hotel's size, location, layout, number of guest rooms, appearance, guest demographics, business ratings, and the owner's experience and financial condition.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Full-Time
Territory Type
Non-Exclusive
Territory Size Requirements
Magnuson Franchising does not grant franchisees an exclusive territory. Magnuson Franchising and its affiliates retain all rights to place Magnuson Grand® or Magnuson Hotels® businesses and any other business activities in any location, regardless of the nature or location of business activities or their customers. This includes businesses offering similar or competitive products or services, and business activities through alternative distribution channels such as the Internet, catalog sales, or telemarketing. Magnuson Franchising will not pay the franchisee for exercising these rights. Franchisees may only operate their Magnuson Grand® or Magnuson Hotels® hotel from the approved Incumbent Hotel premises and may not relocate. There are no limitations on a franchisee's ability to solicit customers in any location by general marketing, other than through the Internet or any Third-Party Distribution Channel, for which Magnuson Franchising has the exclusive right to offer guest rooms.
Staffing Notes
The Magnuson Grand® or Magnuson Hotels® franchisee is solely responsible for managing their Hotel. They cannot delegate responsibilities or enter into concession, lease, or management arrangements without Magnuson Franchising's prior written consent. The franchisee must identify one natural person owner, the "Managing Owner," to supervise the hotel's day-to-day operation on a full-time basis. This Managing Owner is authorized to make binding decisions on behalf of the franchisee regarding the hotel and the franchise agreement. The franchisee is solely responsible for all decisions regarding employees, agents, and independent contractors, including their salaries, wages, benefits, and taxes. Magnuson Franchising's actions to protect its brand or system do not create an employer, joint-employer, or co-employer relationship with the franchisee's staff. Magnuson Franchising may require any personnel with access to Confidential Information to sign a non-disclosure agreement. All hotel personnel are responsible for complying with Brand Standards.