Sleep Inn Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$8,380,445 - $12,746,895
Franchise Fee
$5,000
Min Cash Required
$125,000
Total US Locations
410
Business Summary
Sleep Inn operates hotels under the "SLEEP INN" or "SLEEP INN & SUITES" trademarks, offering mid-scale, limited-service accommodations. Sleep Inn hotels provide guests with amenities such as oversized work areas, complimentary breakfast, high-speed internet, and in-room coffee. Sleep Inn also offers dual-branded hotels, combining a Sleep Inn with a Mainstay Suites, to capitalize on both transient and extended-stay market demands.
Corporate History
Choice Hotels International, Inc. began its business in 1939 as Quality Courts United, a membership association formed by seven independent motel owners in Florida. In 1963, the organization became a for-profit corporation named Quality Courts Motels, Inc. The company expanded its hotel brands and market reach over the years, changing its corporate name to Choice Hotels International, Inc. in 1990 and again in 1997. Choice Hotels has indirect international franchise operations since approximately 1958 and acquired Radisson Hospitality, LLC in 2022, integrating brands such as Radisson and Country Inn & Suites into its portfolio. Choice Hotels started offering franchises under the SLEEP INN trademark in 1987.
Financial Overview
Investment Range
$8,380,445 - $12,746,895
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$46,200
Minimum Cash Required
$125,000
Royalty %
5.5%
Marketing %
3.5%
Equipment Costs (Low)
$801,800
Equipment Costs (High)
$1,032,800
Working Capital
$260,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The auditors have given Choice Hotels International, Inc. an unqualified opinion on its financial statements, indicating that the company's financial position and results of operations are presented fairly. There are no explicit mentions of going concern issues or substantial doubt about the company's ability to continue operations. The company has significant debt obligations, but it has reported strong revenues and net income over the past three years, with management not expecting current legal proceedings to materially adversely affect its financial position.
Financing Details
Choice Hotels International, Inc. offers several financing options directly to franchisees. This includes, in its sole discretion and upon credit approval, financing for the affiliation fee through a promissory note, typically due in a lump sum within three months with no interest unless defaulted. Choice Hotels may also provide selected capital support for strategically important properties, structured as forgivable promissory notes over 10 or 20 years, with forgiveness contingent on no defaults. An Incentive Program offers $2,500 per room (up to $200,000) for qualifying underrepresented entrepreneurs and veterans, also through a forgivable 10-year promissory note (or a 5-year note for 50% of the amount). For re-licensing an existing Sleep Inn hotel, a 50% discount on the affiliation fee is available to qualifying franchisees. Additionally, Choice Hotels has agreements with third-party lenders like PMC Commercial Trust, Balboa Capital Corporation, and Ascentium Capital LLC, which offer conventional and lease financing for various startup and ongoing costs. Franchisees are not obligated to use these third-party lenders.
Performance Metrics
Total US Locations
410
Franchised Units
410
Corporate Units
0
Franchising Since
1987
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
79
Litigation Summary
Choice Hotels International, Inc. is involved in numerous pending litigations and arbitrations. One class action lawsuit, Norma Knuth v. Radisson Hotels International, Inc., et al. (filed 2014), alleges wrongful collection of destination marketing fees by Canadian hotels, seeking $403 million in restitution and damages, and remains pending. Another case, Jai Sai Baba, LLC, et al. v. Choice Hotels International, Inc., et al. (filed 2020), brought by approximately ninety current and former franchisees, accuses Choice Hotels of discriminatory and anti-competitive practices, Racketeer Influenced and Corrupt Organizations Act, Sherman Act, Civil Rights Act, and state franchise law violations, and is currently stayed pending individual arbitration. T&T Management, Inc. v. Choice Hotels International, Inc., Country Inn & Suites by Radisson, Inc. and Sunshine Fund Port Orange, LLC (filed 2023) alleges breach of agreement and misuse of guest data, with the case transferred to Minnesota and a motion to dismiss pending. CS Anaheim Hotel Investments, LLC v. Choice Hotels International, Inc. (filed 2024) alleges a fraudulent rebate scheme, misuse of system fees, misrepresentation, breach of contract, and California law violations, with a motion to stay litigation pending. Additionally, Choice Hotels initiated 71 actions in 2024 against various franchisees and individuals to recover unpaid royalties, liquidated damages, and other debts. In the past fiscal year, four cases were resolved: Sender Kohl v. Choice Hotels International, Inc. (filed 2018) settled with Choice Hotels paying $85,000. Highmark Lodging, LLC, et al. v. Choice Hotels International, Inc., et al. (filed 2021) resulted in an award of $779,398.40 against Choice Hotels in March 2024. Dahya Investments Incorporated, et al. v. Choice Hotels International, Inc., et al. (filed 2021) concluded with Dahya receiving $882 for breach of contract but ordered to pay Choice Hotels $603,483.00 for attorney's fees and costs. Lastly, Choice Hotels International, Inc. v. DIP Hospitality, LLC, et al. (filed 2021) saw Choice Hotels prevail on some claims for $256,051.37, while DIP Hospitality, LLC won a wrongful termination claim for $4,411,678.56 and was awarded fees and costs of $430,125.87 in July 2024.
Bankruptcy History
Choice Hotels International, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Conditions
Choice Hotels International, Inc. does not offer a renewal or extension of the franchise agreement after the initial 20-year term expires. Therefore, there are no conditions for renewal.
Training & Support Program
Franchisor Assistance
Choice Hotels International, Inc. assists Sleep Inn franchisees with site selection approval, reviewing and commenting on preliminary and final architectural designs to ensure they meet prototype specifications for new construction. They also provide consultation for construction, renovation, maintenance, operation, and marketing. Choice Hotels' Opening Services department provides an Onboarding Project Director and Opening Services Manager to monitor project progress, coordinate training, enroll hotels in marketing programs, and ensure the hotel meets brand standards before its first Quality Assurance Review (QAR). Choice Hotels provides mandatory Choice Onboard orientation (20 hours classroom) and Hospitality Operations Success Training (HOST) (27 hours, virtual) for owners and general managers. Additional training programs may be required based on hotel needs. For re-licensed hotels, customized training videos and live virtual sessions are provided. Choice Hotels also provides onboarding for its proprietary choiceADVANTAGE® property management system, which includes dedicated remote support, hardware setup, software configuration, and reporting. Optional on-site training is available for an additional fee. After opening, Choice Hotels administers a quality assurance program through periodic visits and guest satisfaction surveys, advising on necessary improvements. They provide a comprehensive advance reservation system funded by the Marketing and Reservation Fee, along with national, international, and regional advertising, promotion, publicity, and marketing research. Franchisees have continuous access to the Rules and Regulations via ChoiceConnect and can participate in voluntary regional marketing cooperatives (though participation may become mandatory). Choice Hotels also supports franchisees with brand standards, procurement services, and a Franchise Advisory Council.
Initial Training Hours
69
Training Location
Corporate headquarters in North Bethesda, Maryland or Scottsdale, Arizona
Ongoing Support
After opening, Choice Hotels International, Inc. provides ongoing support services to its Sleep Inn franchisees. This includes administering a quality assurance program through periodic hotel visits and guest satisfaction surveys to evaluate compliance with the franchise agreement and brand standards, and advising on necessary corrective actions. Choice Hotels provides an advance reservation system, funded by the monthly Marketing and Reservation Fee, and conducts national, international, and regional advertising, promotion, publicity, and marketing research. Franchisees have continuous access to the Rules and Regulations via ChoiceConnect, and they can participate in voluntary regional marketing cooperatives (though these may become mandatory). Choice Hotels also offers various optional training programs and regional workshops throughout the year to help franchisees improve effectiveness and efficiency.
Franchise Requirements
Ideal Candidate Profile
Choice Hotels International, Inc. seeks Sleep Inn franchisees who meet its current qualifications, including passing a standard credit review. Ideal candidates, or their transferees, must demonstrate strong educational, managerial, and business standards, possess good moral character, a positive business reputation, and a strong credit rating. They should have the experience, aptitude, and ability to operate a hotel, along with adequate financial resources and capital. While direct personal participation in the hotel's operation by the owner is not required, Sleep Inn franchisees must ensure their hotel has a certified General Manager. Choice Hotels also encourages "top hotel developers from diverse backgrounds" and "underrepresented entrepreneurs," including veterans, through its Incentive Program.
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
Choice Hotels International, Inc. grants Sleep Inn franchises for specific hotel sites. While franchisees generally do not receive an exclusive territory, they are granted an "Area of Enhanced Protection" as long as they are in good standing. The size of this area is determined by the hotel's market category and location, expressed in radial miles. For example, a Primary market/Airport location has a 1-mile radius, while a Tertiary market/Highway location has a 7-mile radius. Within this Area of Enhanced Protection, Choice Hotels will not typically grant another same-brand franchise unless the market is deemed inadequately served, and an incremental impact study confirms less than a 5% reduction in the existing hotel's annual gross room revenues. Franchisees also have objection rights for proposed same-brand hotels outside their Area of Enhanced Protection but within specified notification areas.
Staffing Notes
Choice Hotels International, Inc. does not mandate personal participation from the Sleep Inn franchisee in the hotel's daily operations. However, it is a requirement for the hotel to have a certified General Manager on-site. New or replacement General Managers must complete Choice Hotels' Certified General Manager training under the Hospitality Operations Success Training (HOST) program. At least one managerial staff member must achieve HOST certification within 90 days of the hotel's opening or re-licensing and must be present on the hotel premises. Sleep Inn franchisees are solely responsible for the training of all other hotel employees.