Signature Inn Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$255,624 - $6,566,547
Franchise Fee
$20,000
Min Cash Required
$30,000
Total US Locations
11
Business Summary
Signature Inn operates affordable boutique hotels in the economy lodging segment. Signature Inn hotels offer a unique lodging experience with fun, retro mid-century styling combined with modern features and creative design elements, referred to as "modern-retro", at an affordable price. These hotels must have at least 40 guest rooms and qualify for at least a 2-diamond rating. Signature Inn hotels provide complimentary high-speed internet access, complimentary newspapers in the lobby, and participate in the Sonesta Travel Pass loyalty program. All locations are 100% smoke-free and pet-friendly, though waivers may be available in certain circumstances. The brand emphasizes "Signature Moments" with its distinctive décor and services to enhance guest stays. Franchisees are expected to be experienced professional hotel operators or engage an experienced hotel management company.
Corporate History
Sonesta RL Hotels Franchising Inc. (SRLHF), the franchisor of Signature Inn, was originally formed in Washington state on December 24, 1986, under the name Vance Hotels, Inc. The company later changed its name to Red Lion Hotels Franchising, Inc. in September 2005, and then to Sonesta RL Hotels Franchising Inc. in September 2021. Its parent company, Red Lion Hotels Corporation (RLHC), was incorporated in 1978. SRLHF has expanded its portfolio through several acquisitions over the years, including the intellectual property and franchise agreements of GuestHouse International, LLC in April 2015, and the operating assets of Vantage Hospitality Group, Inc., which included the Signature Inn brand, in September 2016. In May 2018, SRLHF also acquired the Knights Inn brand. A significant milestone occurred in March 2021 when RLHC merged with Sonesta International Hotels Corporation, making RLHC a wholly-owned subsidiary of Sonesta. Signature Inn has been offering franchises since October 2017.
Financial Overview
Investment Range
$255,624 - $6,566,547
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$23,000
Minimum Cash Required
$30,000
Equipment Costs (Low)
$160,935
Equipment Costs (High)
$1,007,600
Working Capital
$60,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Sonesta RL Hotels Franchising Inc.'s parent company, Red Lion Hotels Corporation (RLHC), has audited consolidated financial statements which received an unqualified opinion from its auditor, Deloitte & Touche LLP. The 2023 financial statements were restated to correct cash flow presentation misstatements, but these corrections did not affect RLHC's net income, balance sheet, or shareholder equity. RLHC manages cash through a central concentration account with its owner, Sonesta, involving transfers for working capital and vendor payments. Despite these related-party transactions, RLHC states it has sufficient funds for operations and can seek additional funds from Sonesta if needed. A partial valuation allowance was recorded to reduce deferred tax assets, indicating some uncertainty in realizing all of them.
Financing Details
Signature Inn offers franchisees financing for a portion of the Initial Fee and may provide development incentives. Franchisees can pay up to 75% of the Initial Fee by the Hotel's Opening Date, signing a promissory note. This note does not accrue interest unless there is a default, in which case interest is charged at the lesser of 1.5% per month or the highest legal rate. Additionally, Signature Inn may offer financial incentives for new hotels, ranging from $500 to $5,000 per guest room. These incentives are provided via a development incentive promissory note and generally do not need to be repaid unless the franchise agreement is terminated early or transferred. If an incentive becomes repayable and isn't paid on time, it will incur interest at the same default rate as the Initial Fee note. Outside of these specific programs, Signature Inn does not offer or guarantee any other financing arrangements to franchisees.
Performance Metrics
Total US Locations
11
Franchised Units
11
Corporate Units
0
Avg Square Footage
25,000
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
18
Litigation Summary
Signature Inn and its parent company, Sonesta RL Hotels Franchising Inc. (SRLHF), have been involved in several litigation cases. Currently, there is a pending class action lawsuit filed in August 2023 against former board members of the parent company, including Adam Portnoy, and other defendants. This lawsuit alleges breaches of fiduciary duties related to a merger transaction and failure to disclose necessary information to stockholders. A motion to dismiss was granted but has been appealed. In 2021, eight lawsuits were filed by purported stockholders of RLHC (SRLHF's parent) concerning its merger with Sonesta. These cases, alleging failure to provide material information, were dismissed in March 2021 following supplemental disclosures and a settlement where RLHC paid the plaintiffs' attorneys $240,000. SRLHF was also involved in several concluded lawsuits unrelated to the merger. In September 2018, Radisson Hotels International, Inc. sued SRLHF for tortious interference with franchise agreements, which was settled in August 2021 with SRLHF paying $500,000. SRLHF filed a lawsuit in March 2019 against a guarantor for breach of guarantee, which was dismissed without prejudice in October 2020. In June 2018, SRLHF was sued for intentional and negligent misrepresentation related to a hotel sale, settling in March 2019 with the plaintiffs paying SRLHF $250,000. Two lawsuits from March and May 2017 against former franchisees and guarantors for trademark infringement and breach of contract (with counterclaims alleging additional fees and deceptive trade practices) were settled in December 2018 for $500,000, and the defendants were permanently enjoined from using SRLHF's marks. Another lawsuit from May 2016 against guarantors for breach of personal guaranty (with counterclaims for breach of contract, good faith, promissory estoppel, and fraud) was settled in December 2018 for $80,000. In February 2019, SRLHF sued a guarantor for breach of guarantee, which was settled in October 2019 for $150,000. A May 2017 lawsuit against a former brand member for failure to pay was settled in February 2018 for $10,500. A December 2016 lawsuit against a former franchisee for failure to pay was settled in December 2017. Additionally, Signature Inn has three pending lawsuits filed in June 2024 against former franchisees and guarantors to collect unpaid amounts and liquidated damages.
Bankruptcy History
Signature Inn has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Conditions
Signature Inn franchise agreements are non-renewable. Franchisees do not have a right to renew their agreement after the initial term expires.
Training & Support Program
Franchisor Assistance
Signature Inn provides franchisees with comprehensive support starting before the hotel opens. This includes an initial inspection and a Property Improvement Plan (PIP) for existing hotels, as well as reviewing and approving architectural plans and designs. Signature Inn assists with onboarding services, gathers necessary information to integrate the hotel into its Central Reservation System (CRS), and provides initial brand training for one hotel representative covering operations, marketing, sales, loyalty programs, and brand culture. Franchisees also receive the Brand Manual and a list of approved suppliers. Ongoing support includes access to the brand-designated CRS, required and optional training programs, and Revenue Management Insights with competitor benchmarking reports. Signature Inn also provides Operations Insights, convenes Brand Conferences at least every two years for networking and education, and offers access to an IT Help Desk and an owner's intranet portal. Marketing support includes a brand promotion program for all Network Hotels, which funds advertising, online campaigns, public relations, and a global sales department. Franchisees receive access to a Central Reservations Office (call center), participate in a Third-Party Distribution Program with online travel agencies, and are part of the Sonesta Travel Pass loyalty program. The franchisor also establishes and hosts one email address for each hotel. Technologically, Signature Inn designates and requires specific Property Management Systems (PMS) with two-way connectivity to its CRS and loyalty program, a Shift4 credit card interface, periodic PMS upgrades, and an authorized branded internet landing page. Franchisees must install in-room entertainment systems, RFID Key Systems, and IP-based phone systems for new construction, along with other ancillary equipment. A designated learning management system is provided for training resources.
Initial Training Hours
31
Training Location
Virtually, at the franchisee's hotel, or another designated location
Ongoing Support
Signature Inn provides continuous support to its franchisees after their hotels open. This includes ongoing training programs, which can be conducted in-person/on-site or virtually, though fees apply for these. Franchisees receive Revenue Management Insights, which include periodic competitor benchmarking reports and pricing reports, and Operations Insights, which cover online review management and guest satisfaction surveys. Signature Inn also convenes a Brand Conference at least every two years for networking and educational seminars. Franchisees have access to an IT Help Desk and an owner's intranet portal, and Signature Inn maintains and administers a comprehensive Marketing Program. Hotels benefit from access to the Central Reservations Office (call center) and participation in a Third-Party Distribution Program with various online travel agencies. The Sonesta Travel Pass loyalty program is also a mandatory ongoing offering. Each hotel is provided with one hosted email address. Beyond these, ongoing support involves quality assurance inspections (which may incur fees), and assistance with guest relations for unresolved complaints (also subject to fees). If franchisees fail to respond to negative online reviews, Signature Inn may step in on their behalf, charging a fee for each response. Optional programs like Revenue Strategy Support are available for an additional monthly fee. Signature Inn may also require and charge for property improvement plans (PIPs) and reinspections if hotels are not in compliance with brand standards. The franchisor can also procure required insurance for a franchisee if they fail to do so, charging back the costs, and may require new photography after significant renovations.
Franchise Requirements
Ideal Candidate Profile
Signature Inn is seeking experienced and professional hotel operators. Franchisees must have a background in the hotel industry or commit to engaging an experienced hotel management company on their behalf. Additionally, it is required that qualified professional hotel management be present on-site at the hotel.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Staffing Notes
Signature Inn hotels require management by a full-time general manager, who can either be an employee of the franchisee or of an approved Management Company. While the franchisee is ultimately responsible for the management, direction, and control of the hotel, they are not required to personally participate in the direct daily operations. If a Management Company is engaged, it must be approved by Signature Inn and will be jointly and severally liable for all franchisee obligations under the agreement, excluding actual payments to third parties or affiliates. The Principal of a legal entity franchisee must hold at least a 25% ownership and voting interest and act as a chief executive officer.