Red Roof Inn Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$259,000 - $14,843,155
Franchise Fee
$17,000
Total US Locations
619
Business Summary
Red Roof Franchising, LLC offers franchisees the opportunity to own and operate guest lodging facilities under various Red Roof Inn brands, including Red Roof Inn, Red Roof Inn & Suites, Red Roof PLUS+, and Red Roof PLUS+ & Suites. These hotels provide high-quality, low-cost accommodations primarily in the economy lodging segment for both business and leisure travelers. Red Roof Inn & Suites properties offer enhanced amenities like spacious rooms, refrigerators, and coffee makers, while Red Roof PLUS+ and Red Roof PLUS+ & Suites provide further enhanced amenities and service requirements to appeal to travelers seeking an upgraded experience at a value price. Red Roof Franchising, LLC also offers opportunities for Dual Brand Hotels, combining a Red Roof Inn or Red Roof PLUS+ with a HomeTowne Studios by Red Roof extended stay lodging facility in a single or connected building design.
Corporate History
Red Roof Franchising, LLC was formed as a Delaware limited liability company in January 2007. The Red Roof Inn brand itself opened its first hotel in 1973. Red Roof Franchising, LLC and its predecessors have offered Red Roof Inn franchises since August 1996. Franchises for Red Roof Inn and Red Roof Inn & Suites began in September 2007, and for Red Roof PLUS+ and Red Roof PLUS+ & Suites in January 2014. Red Roof Franchising, LLC is part of a larger corporate structure, with RRF Holding Company, LLC as its parent and Red Roof Inns, Inc. (RRI) as the ultimate parent, which previously offered Red Roof Inn franchises. Red Roof Franchising, LLC also has affiliates, The Red Collection, LLC and HomeTowne Studios, LLC, which have offered franchises for their respective lodging brands since December 2017 and July 2018, respectively. As of December 31, 2024, there were 27 franchised Dual Brand Hotels in operation.
Financial Overview
Investment Range
$259,000 - $14,843,155
Franchise Fee (Low)
$17,000
Franchise Fee (High)
$39,000
Royalty %
5%
Marketing %
4%
Equipment Costs (Low)
$98,000
Equipment Costs (High)
$13,900,611
Working Capital
$133,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Red Roof Franchising, LLC's consolidated financial statements for the years ended December 31, 2024, 2023, and 2022 received an unqualified opinion from their independent auditor. The company's cash and cash equivalents decreased from approximately $45.9 million in 2022 to $22.4 million in 2024, while net income slightly declined from $17.3 million in 2022 to $15.5 million in 2024. Revenues also saw a slight decrease from $95.4 million in 2022 to $91.9 million in 2024. A notable financial arrangement involves a $6.5 million promissory note from an affiliate (RRI Reservations, LLC) to the parent company (RRI), extended in 2022 with full forgiveness granted ratably over a 10-year term ending December 31, 2031, with $650,000 forgiven in 2022. This ongoing debt forgiveness from the parent company provides financial support to the franchisor. Additionally, Red Roof Franchising, LLC is involved in a significant number of sex trafficking-related lawsuits, with 205 matters naming the company and/or its parent, 66 of which are filed. While an estimate of potential loss cannot be made, the company states it does not believe the impact will result in a material liability to its combined financial position or liquidity.
Financing Details
Red Roof Franchising, LLC does not offer direct or indirect financing to its franchisees. Additionally, Red Roof Franchising, LLC will not guarantee any franchisee's note, lease, or other financial obligations.
Performance Metrics
Total US Locations
619
Franchised Units
584
Corporate Units
35
Franchising Since
1996
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
4
Litigation Summary
Red Roof Franchising, LLC has had recent and ongoing litigation. A pending lawsuit, filed in October 2023 and amended in March 2025, involves a former franchisee alleging breach of contract, tortious interference, and violations of the New Jersey Franchise Practices Act against Red Roof Franchising, LLC and its parent company, Red Roof Inns, Inc. Additionally, in 2024, Red Roof Franchising, LLC filed two collection actions against franchisees in Georgia and Texas. In historical litigation, Red Roof Franchising, LLC resolved a matter with the Maryland Securities Commissioner in 2014, which involved an inadvertent violation of Maryland franchise law related to registration and disclosure, for which a franchisee was offered, but did not accept, rescission.
Bankruptcy History
Red Roof Franchising, LLC's General Counsel, Gerrod Bede, previously served as General Counsel for ASTECH Engineered Products, Inc. (now AEP Legacy, Inc.), which filed for Chapter 11 bankruptcy reorganization in July 2022. A plan of liquidation for ASTECH was confirmed in May 2024. Red Roof Franchising, LLC itself has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew their Red Roof Inn franchise for an additional 10-year term, franchisees must submit a renewal application 12 to 18 months before the initial term ends. Conditions for renewal include: being in good standing without default in any agreements, having paid all monetary obligations on time, completing required training for managers and other designated employees, upgrading the Inn to meet current brand standards at the franchisee's expense, executing a general release of claims against Red Roof Franchising, LLC and its affiliates, paying a renewal fee equal to 50% of the then-current initial franchise fee, and signing Red Roof Franchising, LLC's current form of franchise agreement, which may have different terms.
Training & Support Program
Franchisor Assistance
Before a Red Roof Inn opens, Red Roof Franchising, LLC assists with site approval, provides initial training programs, loans physical or electronic manuals, designates computer and data communication systems, reviews renovation or construction plans, and inspects the Inn prior to opening. Once the Inn is operational, Red Roof Franchising, LLC offers continuing training, consultation, and advisory assistance for management, operation, and marketing. It establishes and maintains a Reservation System and Marketing Program, providing national, regional, and local advertising and promotions across various media, including digital and social media. Red Roof Franchising, LLC may also introduce new products or services that franchisees must adopt. It offers IT support, including a help desk, hardware/software support, desktop protection, and guidance on PCI-DSS compliance. Franchisees are assigned a Regional Vice President of Operations or Franchise Operations Director for field support during construction, opening, and throughout the franchise term. Ongoing training includes mandatory annual Continuing Education courses, and optional On-Site Quality Training/Audits if performance standards are not met.
Initial Training Hours
55
Training Location
Hybrid: online/virtual, franchisee's location, and corporate offices in New Albany, OH
Ongoing Support
After opening, Red Roof Franchising, LLC provides ongoing support through a variety of channels. This includes continuing training, consultation, and advisory assistance in management, operations, and marketing. Red Roof Franchising, LLC maintains a Reservation System and Marketing Program, deploying national, regional, and local advertising campaigns across all media types, including online and social media. It manages programs such as RediRewards Preferred Member Program, Volume Plan Plus®, and RediBill. Franchisees receive IT support, including a help desk, hardware and software maintenance, and desktop protection, along with assistance in meeting PCI-DSS compliance standards. A Regional Vice President of Operations or Franchise Operations Director is assigned for field support, offering guidance throughout the franchise term with periodic visits. Additionally, Red Roof Franchising, LLC mandates annual Continuing Education training courses and may require On-Site Quality Training or Audits if the Inn's quality or financial performance falls below standards.
Franchise Requirements
Ideal Candidate Profile
Red Roof Inn is seeking candidates for Red Roof PLUS+ and Red Roof PLUS+ & Suites properties who have a strong background in guest satisfaction, proven guest service skills, and a history of successful property operations. Ideal franchisees should also understand the continuous need for upgrading their Red Roof PLUS+ or Red Roof PLUS+ & Suites property to meet brand standards. The franchisor also considers market qualifications, such as a location with midscale and limited-service competition, appeal to business and leisure travelers, and the potential to support strong average daily rates.
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
Red Roof Franchising, LLC negotiates and designates an Exclusive Territory around each Inn based on factors such as the number of guest rooms, competition in the area, population density, proximity to major highways and exit ramps, traffic patterns, access, visibility, and future development plans. This Exclusive Territory can vary in size from as small as one or two city blocks to as large as a small town.
Staffing Notes
Red Roof Franchising, LLC requires each Red Roof Inn to have an on-premises manager who dedicates their full time and best efforts to managing the Inn and does not work for any competitor. This manager must successfully complete Red Roof Franchising, LLC's RED Advantage Training Program and comply with manager specifications in the Manuals. Franchisees are solely responsible for all employment decisions, including hiring, firing, training, compensation, and scheduling of all Inn employees. Employees, including front desk, housekeeping, and maintenance staff, must complete initial on-site training provided by Red Roof Franchising, LLC prior to opening. Franchisees must inform employees that they are employed and supervised by the franchisee, not by Red Roof Franchising, LLC or its affiliates.