Suburban Extended Stay Hotel Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$330,855 - $12,989,550
Franchise Fee
$5,000
Min Cash Required
$10,000
Total US Locations
109
Business Summary
Suburban Studios hotels provide extended-stay accommodations with competitive rates for stays of a week or longer. Each Suburban Studios hotel room includes a spacious layout, a well-equipped kitchen, and complimentary high-speed internet access. The brand also uses a modular 'kitchen in a box' design to facilitate the conversion of existing hotels into economy extended-stay properties.
Corporate History
Choice Hotels International, Inc. has a long history, starting in 1939 as Quality Courts United, an association of independent motel owners. It became a for-profit corporation in 1963 under the name Quality Courts Motels, Inc., and eventually rebranded to Choice Hotels International, Inc. in 1990. Suburban Studios became part of the company's portfolio through the acquisition of the Suburban Extended Stay Hotel business in 2005, which was later rebranded to Suburban Studios in 2022. Choice Hotels International, Inc. has also expanded its global presence by franchising various hotel brands internationally, developed a cloud-based technology subsidiary called SkyTouch Solutions, LLC, and acquired Radisson Hospitality, LLC in 2022, adding several Radisson brands to its portfolio.
Financial Overview
Investment Range
$330,855 - $12,989,550
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$55,575
Minimum Cash Required
$10,000
Royalty %
6%
Marketing %
2.5%
Equipment Costs (Low)
$187,800
Equipment Costs (High)
$1,396,800
Working Capital
$225,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Choice Hotels International, Inc. received an unqualified audit opinion for its consolidated financial statements for the years ended December 31, 2024, 2023, and 2022, indicating that the financial reporting is fair and in accordance with U.S. GAAP. However, the company's consolidated balance sheet as of December 31, 2024, shows a shareholder deficit of $45,271,000, which is a decline from a positive shareholder equity of $35,598,000 in 2023. This negative equity position suggests that the company's liabilities exceed its assets. The company also reported provisions for credit losses on accounts receivable of $11 million in 2024 and $7.5 million in 2023. Choice Hotels International, Inc. recorded an impairment loss of $3.4 million in 2023 related to a legacy Radisson corporate office lease but did not identify any indicators of impairment for long-lived assets from the Hotel Franchising reporting unit in 2024.
Financing Details
Choice Hotels International, Inc. offers several financing options. For the affiliation fee, it may provide an interest-free promissory note, typically due in one lump sum within three months, with a personal guarantee often required from owners. If there's a default, the note accrues 18% annual interest. Choice Hotels International, Inc. also provides "Selected Capital Support" for strategically important properties, in the form of a promissory note forgiven over 10 or 20 years if the franchisee remains in good standing. This capital support loan bears interest only upon default, at prime plus 2%. Additionally, an "Incentive Program" is available for underrepresented entrepreneurs and veterans, offering $2,500 per room (up to $175,000 maximum) as a 10-year forgivable promissory note, or a 5-year forgivable note for half the amount. For franchisees re-licensing an existing Choice-branded hotel who qualify for the Incentive Program, a 50% discount on the affiliation fee is provided. Choice Hotels International, Inc. also has partnerships with third-party lenders such as PMC Commercial Trust, Balboa Capital Corporation, and Ascentium Capital LLC, which offer conventional and lease financing for various startup and ongoing costs. These third-party options have their own terms, conditions, and fees, and Choice Hotels International, Inc. receives a flat annual payment from each of these lenders for marketing access.
Performance Metrics
Total US Locations
109
Franchised Units
109
Corporate Units
0
Franchising Since
2005
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
76
Litigation Summary
Choice Hotels International, Inc. has a significant legal history, including a total of 76 litigation and arbitration cases disclosed in the FDD. Many of these cases are recent or currently pending. There are four ongoing cases, two initiated by franchisees (T&T Management, Inc. and CS Anaheim Hotel Investments, LLC) alleging breach of contract, misuse of data, anti-competitive practices, and fraudulent schemes, among other claims. The case brought by T&T Management, Inc. was filed in June 2023, and the CS Anaheim Hotel Investments, LLC case was filed in October 2024. Another pending class action, Norma Knuth v. Radisson Hotels International, Inc., et al., filed in 2014, alleges wrongful collection of destination marketing fees. A large number of actions (68 cases) were initiated by Choice Hotels International, Inc. in 2024 against various franchisees to recover royalties, liquidated damages, and other debts. Several notable cases were resolved in 2024 or late 2023: in one instance, Choice Hotels International, Inc. was ordered to pay $779,398.40 to Highmark Lodging, LLC. In another, Dahya Investments Incorporated was ordered to pay Choice Hotels International, Inc. $603,483.00, while Choice Hotels International, Inc. was ordered to pay $882.00 to Dahya for breach of contract. Additionally, Choice Hotels International, Inc. was awarded $256,051.37 in a case against DIP Hospitality, LLC, but DIP Hospitality, LLC prevailed on a wrongful termination claim and was awarded $4,411,678.56 plus attorney's fees and costs of $430,125.87.
Bankruptcy History
Suburban Studios has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Conditions
Suburban Studios does not offer renewal rights or an extension of the franchise agreement term once the initial 20-year term expires.
Training & Support Program
Franchisor Assistance
Suburban Studios provides extensive support to its franchisees both before and after opening. Before a hotel opens, Choice Hotels International, Inc. approves the chosen site, reviews and comments on preliminary and final architectural and design plans, and offers discretionary consultation for construction, renovation, operation, and marketing. An Onboarding Project Director and Coordinator guide the franchisee through milestones, introduce Choice Hotels International, Inc.'s support departments, enroll the hotel in marketing programs, and help prepare for the first Quality Assurance Review. After opening, Suburban Studios offers continuous support through its Franchise Services Department, which assists with sales, marketing materials, and participation in brand programs. A quality assurance program is administered through periodic hotel visits and guest satisfaction surveys, with guidance for improvement and potential penalties for non-compliance. Choice Hotels International, Inc. also manages a comprehensive marketing and reservations system, which includes national and international advertising, promotional activities, and a central reservation system, all funded by the Marketing and Reservation Fee. Franchisees receive 24/7 remote support, updates, and online training for the mandatory choiceADVANTAGE® property management system, and access to an annual Educational Resources Program through ChoiceU. Additionally, Choice Hotels International, Inc. may conduct regular virtual trainings on extended stay operations. Training is a key component: new owners must attend an Owner Immersion program (12-15 hours) at corporate locations for $1,250. General Managers must complete an Operations Certification program (21 hours online/virtual) for $1,500. All staff receive online certification. Inexperienced extended-stay operators, including their General Managers, may be required to attend additional immersive training (2-4 days) costing $2,500-$7,500. Re-licensed hotels receive customized training videos and virtual sessions for $995. An annual Educational Resources Program, costing $600, provides unlimited access to online learning.
Initial Training Hours
155
Training Location
North Bethesda, Maryland or Scottsdale, Arizona
Ongoing Support
After a Suburban Studios hotel opens, Choice Hotels International, Inc. provides ongoing support through various departments and programs. The Franchise Services Department offers assistance with sales, marketing materials, and participation in brand programs. A quality assurance program is administered through periodic hotel visits and guest satisfaction surveys, with guidance for improvement and potential penalties for non-compliance. Choice Hotels International, Inc. also manages a comprehensive marketing and reservations system, which includes national and international advertising, promotional activities, and a central reservation system, all funded by the Marketing and Reservation Fee. Franchisees receive 24/7 remote support, updates, and online training for the choiceADVANTAGE® property management system, and access to an annual Educational Resources Program through ChoiceU. Additionally, Choice Hotels International, Inc. may conduct regular virtual trainings on extended stay operations.
Franchise Requirements
Ideal Candidate Profile
Suburban Studios seeks franchisees who can meet the company's educational, managerial, and business standards, and who possess a good moral character, business reputation, and credit rating. Ideal candidates should have the experience, aptitude, and ability to operate a hotel, along with adequate financial resources and capital to support the venture. For those interested in incentive programs, candidates must be majority owners actively engaged in the deal process and pass Choice Hotels International, Inc.'s standard credit review. In some cases, Choice Hotels International, Inc. may require franchisees to contract with a recognized hotel management company experienced in extended-stay properties.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Territory Size Requirements
Suburban Studios franchisees are granted franchises for specific sites only and do not automatically receive an exclusive territory. However, Choice Hotels International, Inc. may, in its sole discretion, grant exclusive territories or preferred regions to franchisees. These decisions are based on factors such as local market conditions, the franchisee's prior history with Choice Hotels International, Inc., and the number of hotels they franchise. An exclusive territory would mean no other Suburban Studios hotel could be franchised or operated within that area for a determined period. If a Master Development Agreement is signed, it may grant limited rights to build additional hotels within a protected area, with the specific boundaries and development schedule determined by Choice Hotels International, Inc. The Incremental Impact Policy, which evaluates proximity to existing properties, does not apply to Suburban Studios hotels.
Staffing Notes
Suburban Studios requires franchisees to employ a full-time General Manager dedicated exclusively to their hotel. It is also recommended that franchisees hire a dedicated salesperson, qualified as a hotel Sales Leader or Sales Manager, to focus at least 50% of their time on soliciting extended-stay business. Both the General Manager and all other hotel staff must complete specific online training and certification programs through Choice University, with the General Manager's Operations Certification needing completion within 90 days of hire. All staff must complete their certification track within 90 days of their hire date.