Mainstay Suites Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$324,413 - $16,330,350
Franchise Fee
$2,000
Total US Locations
139
Business Summary
MAINSTAY SUITES offers franchisees the right to construct and operate an extended-stay, limited-service hotel. MAINSTAY SUITES hotels feature residential-style amenities and affordable rates, with each guestroom offering ample space for extended stays, including separate areas for dressing, relaxing, sleeping, and eating, as well as a well-equipped kitchen. Choice Hotels International also offers a dual-brand option combining MAINSTAY SUITES with a SLEEP INN hotel in one building.
Corporate History
Choice Hotels International, Inc. began in 1939 as Quality Courts United, a membership association formed by seven independent motel owners in Florida to establish quality standards and refer guests. It formalized as a for-profit corporation, Quality Courts Motels, Inc., in 1963. The company changed its corporate name to Choice Hotels International, Inc. in 1990 and has been operating under this name since 1997. MainStay Suites, one of its extended-stay limited-service hotel brands, has been franchised since 1996. Choice Hotels International has expanded its hotel brands and market reach significantly, conducting international franchise operations since approximately 1958 and acquiring Radisson Hospitality, LLC in 2022.
Financial Overview
Investment Range
$324,413 - $16,330,350
Franchise Fee (Low)
$2,000
Franchise Fee (High)
$50,000
Royalty %
6%
Marketing %
2.5%
Equipment Costs (Low)
$139,628
Equipment Costs (High)
$1,369,080
Working Capital
$62,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Choice Hotels International's financial statements received an Unqualified Opinion from Ernst & Young LLP, indicating they present fairly in all material respects. The auditor noted the accounting for the Choice Privileges Loyalty Program as a critical audit matter due to the complexity of the models and the estimation of future redemption rates. In terms of overall financial position, Choice Hotels International's consolidated balance sheets show a total shareholders' (deficit) equity of -$45,271 thousand as of December 31, 2024, a decrease from $35,598 thousand in 2023. The company also recognized a $3.4 million impairment loss in 2023 related to a legacy Radisson corporate office lease and $0.2 million in impairment charges on equity method investments in 2022.
Financing Details
Choice Hotels International offers direct financing for the affiliation fee without interest, on a case-by-case basis and subject to credit approval, with payment typically due in one lump sum within three months. The franchisor may also provide select capital support to franchisees developing strategically important properties. This support is evidenced by a promissory note, which can be forgiven over 10 or 20 years and accrues interest only upon default. An Incentive Program is available for underrepresented entrepreneurs and veterans, offering $2,500 per room (up to $200,000 maximum) for new construction or conversion properties. This incentive is a 10-year forgivable promissory note, or a 5-year note for 50% of the amount (up to $100,000 maximum), with interest only accruing upon default. For qualifying franchisees relicensing an existing Choice-branded hotel, a 50% discount on the affiliation fee is offered instead of the Incentive Program. Additionally, Choice Hotels International has non-exclusive Qualified Vendor agreements with third-party lenders, including PMC Commercial Trust (for conventional and SBA loans ranging from $500,000 to $5,000,000), Balboa Capital Corporation (for conventional and lease financing from $5,000 to $1,000,000), and Ascentium Capital LLC (for conventional and lease financing from $5,000 to $500,000). Choice Hotels International receives flat annual payments from these vendors for marketing access.
Performance Metrics
Total US Locations
139
Franchised Units
139
Corporate Units
0
Franchising Since
1996
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
74
Litigation Summary
Choice Hotels International has been involved in several legal disputes. There are four ongoing cases, including a class action lawsuit filed in 2014 concerning destination marketing fees, a 2020 suit alleging discriminatory and anti-competitive practices and various violations (RICO, Sherman Act, Civil Rights Act, state franchise laws), a 2023 case regarding breach of contract and guest data misappropriation, and a 2024 complaint alleging a fraudulent rebate scheme and breach of contract. Additionally, in the fiscal year ending December 31, 2024, Choice Hotels International initiated 66 actions against franchisees to recover royalties, liquidated damages, and other debts. Regarding resolved litigation, a 2021 arbitration case resulted in a $779,398.40 judgment against Choice Hotels International in March 2024. Another 2021 arbitration found a franchisee owed Choice Hotels International $603,483.00, confirmed in January 2024. A third arbitration, initiated by Choice Hotels International in 2021 for unpaid fees, resulted in an award in July 2024 where Choice Hotels International prevailed on some claims for $256,051.37, while the franchisee prevailed on a wrongful termination claim for $4,411,678.56 and was awarded fees and costs of $430,125.87.
Bankruptcy History
Choice Hotels International has no bankruptcy information required to be disclosed in this item.
Agreement Terms
Initial Term
20 years
Training & Support Program
Franchisor Assistance
Choice Hotels International provides comprehensive assistance to MAINSTAY SUITES franchisees. Before opening, this includes approving the selected site, reviewing and commenting on preliminary and final architectural designs to ensure they meet prototype specifications, and offering additional consultation services at its discretion. An Onboarding Project Director and Opening Services Manager are assigned to monitor progress, introduce organizational support, enroll the hotel in marketing programs, and coordinate training. For training, MAINSTAY SUITES offers a mandatory Owner Immersion Program (ES LAUNCH) for owners and a General Manager Operations Certification Program (ESsentials) for general managers, along with online staff certification for all line associates. Additional immersive training may be required for inexperienced extended-stay operators. After opening, ongoing support includes assistance from the Franchise Services Department with identifying accounts, developing promotional materials, advertising opportunities, and a sales action plan. A quality assurance program involves periodic hotel visits and guest satisfaction surveys, with consequences for non-compliance. Choice Hotels International also provides and maintains a central reservation system, conducts national, international, and regional advertising, and supports optional regional marketing cooperatives. Franchisees utilize the proprietary choiceADVANTAGE® property management system, which comes with 24/7 remote support, updates, and online training. Virtual trainings are also offered periodically on extended stay topics.
Initial Training Hours
150
Training Location
North Bethesda, Maryland or Scottsdale, Arizona
Ongoing Support
After opening, MAINSTAY SUITES franchisees receive ongoing support from Choice Hotels International's Franchise Services Department, which assists with identifying accounts, developing promotional materials, advertising opportunities, AAA property inspections, and creating sales action plans. A Quality Assurance program is administered through periodic hotel visits and guest satisfaction surveys to ensure compliance with standards. Hotels failing to meet quality standards may face warnings, penalties, reservation system suspension, or even termination, and may be required to hire a third-party vendor for deep cleaning. Choice Hotels International maintains and upgrades a central reservation system and conducts national, international, and regional advertising campaigns. Franchisees also have access to an online learning management system for ongoing educational resources and may be invited to participate in virtual trainings on extended stay operations. The choiceADVANTAGE® property management system receives 24/7 remote support, including enhancements and updates, and online training through Choice University.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
absentee-allowed
Territory Type
limited
Territory Size Requirements
MAINSTAY SUITES franchises are granted for specific sites. While a standard exclusive territory is not typically granted, Choice Hotels International may, in its sole discretion and based on local market conditions or other factors, grant exclusive territories for a determined period. If a Master Development Agreement is signed, franchisees may receive limited rights to build additional hotels in a protected area according to a development schedule. The Incremental Impact Policy further defines an "Area of Enhanced Protection" for each MAINSTAY SUITES hotel, determined by its market category (e.g., Primary/Airport, Highway, Urban Resort, Suburban, Small Town Metro) and expressed in radial miles (ranging from 0.5 to 7 miles, depending on the category). Choice Hotels International will not typically grant a same-brand franchise within this Area of Enhanced Protection unless the market is inadequately served and an incremental impact study concludes less than a 5% revenue reduction for the existing hotel. Franchisees also have objection rights for applications outside their Enhanced Protection Area, within specified notification radii (7, 10, or 15 radial miles depending on market category).
Staffing Notes
MAINSTAY SUITES requires franchisees to employ a full-time General Manager exclusively for their hotel. It is also recommended that franchisees employ a dedicated salesperson, holding qualifications as either a hotel Sales Leader or Sales Manager, whose primary duty is to focus 50 percent or more of their time on soliciting extended-stay or other business for the hotel. This dedicated salesperson is recommended to be employed at least four months prior to the hotel's opening and to remain continuously staffed thereafter. All hotel staff are required to complete their certification track through the online Choice University learning management system within 90 days of their hire date and must present a certificate of completion upon request.