The James Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$1,728,482 - $99,911,224
Franchise Fee
$75,000
Min Cash Required
$525,839
Business Summary
The James offers franchises for upper-upscale, full-service hotels that provide luxury boutique hotel services. Franchisees operate these hotels following The James' distinct business formats, methods, procedures, standards, and use its proprietary marks to offer lodging and related amenities to business and leisure travelers.
Corporate History
Sonesta RL Hotels Franchising Inc. was originally formed as Vance Hotels, Inc. in Washington on December 24, 1986. It later changed its name to Red Lion Hotels Franchising, Inc. in 2005, and then to Sonesta RL Hotels Franchising Inc. in 2021. The franchisor and its parent, Red Lion Hotels Corporation, have been actively involved in hotel ownership and management since 1978. The company expanded its brand portfolio through various acquisitions, including GuestHouse International in 2015, Vantage Hospitality Group in 2016 (adding brands like Lexington and Americas Best Value Inn), and Knights Inn in 2018. In 2021, Red Lion Hotels Corporation merged with Sonesta International Hotels Corporation, becoming a wholly-owned subsidiary of Sonesta. An affiliate acquired The James hotel brand in 2022, and Sonesta RL Hotels Franchising Inc. began offering franchises for The James brand in October 2022. It also franchises other hotel brands such as Sonesta Hotels and Resorts, Royal Sonesta, Sonesta ES Suites, and Americas Best Value Inn.
Financial Overview
Investment Range
$1,728,482 - $99,911,224
Franchise Fee (Low)
$75,000
Franchise Fee (High)
$125,000
Minimum Cash Required
$525,839
Royalty %
5%
Marketing %
3.5%
Equipment Costs (Low)
$505,868
Equipment Costs (High)
$89,887,368
Working Capital
$952,095
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements of Sonesta RL Hotels Franchising Inc.'s parent, Red Lion Hotels Corporation, received an unqualified audit opinion. However, the company reported a net loss of $2.9 million in 2024 and used $22.1 million in cash for operating activities in 2024, following a loss of $10.9 million in 2023. Its cash and cash equivalents decreased from $37.7 million in 2023 to $13.3 million in 2024. The FDD notes that the parent company relies on cash transfers from its ultimate parent, Sonesta, for working capital and has the ability to seek additional funds from Sonesta if needed to maintain operations and cover obligations.
Financing Details
Sonesta RL Hotels Franchising Inc. offers a development incentive program for new The James brand hotels. This incentive is a financial contribution ranging from $4,000 to $9,000 per Guest Room, provided at the franchisor's discretion. Franchisees must sign a promissory note for this incentive. The incentive is typically disbursed within 45 days after the hotel opens, provided conditions such as satisfactory financial health and completed property improvement plans are met. The amount of the incentive that needs to be repaid decreases annually based on the franchise agreement's term. If the franchise agreement is terminated early or transferred, the remaining repayable amount becomes due. The incentive itself does not bear interest unless it becomes repayable and is not paid on time, in which case it accrues interest at 18% per annum or the highest legal rate. Beyond this incentive program, Sonesta RL Hotels Franchising Inc. and its affiliates do not offer other direct or indirect financing arrangements or guarantees for franchisee obligations.
Performance Metrics
Total US Locations
0
Franchised Units
0
Corporate Units
0
Avg Square Footage
162,000
Franchising Since
2022
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
20
Litigation Summary
The James has pending litigation including one class action lawsuit filed in August 2023 against former members of TravelCenters' board of directors (including Adam Portnoy, a Sonesta RL Hotels Franchising Inc. director) and other entities, alleging breach of fiduciary duties related to a merger and failure to maximize shareholder value. The circuit court granted dismissal in May 2024, but this has been appealed, with oral argument anticipated in April 2025. Additionally, Sonesta RL Hotels Franchising Inc. has filed three lawsuits in June 2024 against former franchisees and their guarantors in Massachusetts federal court to collect unpaid amounts and liquidated damages. The James also had several concluded litigations relating to a merger in 2021 and other various disputes with former franchisees and a competitor between 2016 and 2021, all of which have since been dismissed or settled.
Bankruptcy History
Sonesta RL Hotels Franchising Inc. has no bankruptcy history to disclose.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew a The James franchise, franchisees must provide timely written notice of their intent to renew. They must have substantially complied with the Franchise Agreement throughout its term and not have received four or more default notices. At both the time of giving notice and the start of the new franchise term, they must be in full compliance with the Franchise Agreement and all Brand Standards. Franchisees need to maintain possession of their hotel premises and remodel it as required to meet the then-current Brand Standards. If required by Sonesta RL Hotels Franchising Inc., they must transition their hotel to a different brand concept offered by the franchisor or an affiliate. Any identified deficiencies must be corrected before renewal. Franchisees must sign Sonesta RL Hotels Franchising Inc.'s then-current form of franchise agreement and any related ancillary agreements, which may have terms that differ significantly from their original agreement. Finally, they must pay a renewal fee and, along with their owners, sign a general release.
Training & Support Program
Franchisor Assistance
Sonesta RL Hotels Franchising Inc. provides extensive support to its The James franchisees. Before opening, this includes initial inspections and Property Improvement Plans (PIPs) for conversions, review and approval of hotel plans, onboarding services, and initial training for a Hotel Representative on brand programs, marketing, sales, loyalty, and culture. Sonesta RL Hotels Franchising Inc. also provides the Brand Manual, approves Management Companies, lists equipment specifications and approved suppliers, and assigns a project manager. During operation, Sonesta RL Hotels Franchising Inc. offers ongoing training, convenes a Brand Conference every 24 months, advises on hotel operations, manages the Sonesta Travel Pass loyalty program, and provides IT and franchise services help desks. It also runs a Third-Party Distribution Program, maintains and updates the Brand Manual, and indemnifies franchisees for authorized use of marks. The franchisor operates and maintains a Central Reservation System and a Revenue Management for Hire program. Sonesta RL Hotels Franchising Inc. administers a brand promotion program, maintaining a Franchise System Website and managing online presence guidelines. While it specifies and sometimes assists with computer systems, including PMS, RMS, and central reservation systems, it does not provide assistance with site selection or lease negotiation.
Initial Training Hours
33
Training Location
Virtual or on-site
Ongoing Support
Sonesta RL Hotels Franchising Inc. provides ongoing support for The James franchisees through various channels. This includes offering required and optional training programs, which can be delivered either in-person/on-site or virtually on an ad hoc basis. Franchisees are also required to attend a Brand Conference at least every 24 months, held either virtually or at a designated physical location. Sonesta RL Hotels Franchising Inc. offers periodic advice on hotel operations, manages the Sonesta Travel Pass loyalty program, and provides access to IT and franchise services help desks. It continuously updates the Brand Manual, operates the Third-Party Distribution Program, and maintains access to the Central Reservation System. Franchisees also have the opportunity to participate in a Revenue Management for Hire program. Furthermore, Sonesta RL Hotels Franchising Inc. administers brand promotion programs and manages the Franchise System Website.
Franchise Requirements
Ideal Candidate Profile
The James seeks franchisees who meet specific educational, managerial, and business standards. Ideal candidates should possess good moral character, a strong business reputation, and a solid credit rating, along with the aptitude and ability to operate a hotel. They must also have sufficient equity capital. While franchisees are not required to personally participate directly in the hotel's operation, the hotel must be managed full-time by a General Manager who meets Sonesta RL Hotels Franchising Inc.'s minimum qualifications and has completed required management training.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
The typical territory for The James is non-exclusive, meaning there are no specific size requirements defining an exclusive operating area for the franchisee. However, in special circumstances, Sonesta RL Hotels Franchising Inc. may grant a protected area, typically a two-mile radius around the Brand Hotel, for a limited period of three to five years. The size of this radius can vary based on population density.
Staffing Notes
The James hotels are required to have a full-time General Manager who meets Sonesta RL Hotels Franchising Inc.'s specific qualifications and completes mandatory management training. If this General Manager leaves, a replacement must be appointed within 60 days. Franchisees can choose to hire an approved Management Company to handle daily operations, but they retain ultimate responsibility for the hotel's overall management, direction, and control. Sonesta RL Hotels Franchising Inc. may require a Management Company if the franchisee lacks significant hotel management experience or is receiving an incentive. Franchisees have sole authority over all employment decisions, including hiring, compensation, and work conditions, and must ensure compliance with all applicable labor laws. Additionally, after the first year of operation, if a franchisee opts out of Sonesta RL Hotels Franchising Inc.'s Revenue Management for Hire program, they must employ a dedicated, full-time Hotel Revenue Manager with at least four years of verified experience in a revenue management-specific role in similar hotels, meeting the franchisor's formal training and certification requirements. Franchisees must also notify all employees that they are employed by the franchisee, not by Sonesta RL Hotels Franchising Inc.