The Red Collection Hotel Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$220,875 - $1,569,250
Franchise Fee
$15,000
Total US Locations
5
Business Summary
The Red Collection is a hotel franchise that allows operators of existing hotels to convert and renovate their properties to become a branded Red Collection hotel. These hotels offer affordable, mid-scale lodging that is modern and accessible, located in convenient city locations. Each Red Collection hotel uses its own unique primary trade name and logo, while also appending a Red Collection logo to identify it as part of the brand. This 'soft' brand model emphasizes retaining the hotel's independent character and local marketing focus, while benefiting from the franchise's support programs.
Corporate History
The Red Collection, LLC was formed in October 2017 as a Delaware limited liability company. It operates under the name "The Red Collection" and began offering franchises for its hotels on December 15, 2017. The Red Collection, LLC itself does not own or operate any of its branded hotels. Its parent company is Red Roof Franchising, LLC (RRF), which was formed in January 2007 and offers franchises under other Red Roof Inn brands. RRF's parent company is RRF Holding Company, LLC, which is a subsidiary of Red Roof Inns, Inc. The broader Red Roof Inn System has been continuously operating since 1973, with Red Roof Inn franchises offered by RRF and its predecessors since August 1996.
Financial Overview
Investment Range
$220,875 - $1,569,250
Franchise Fee (Low)
$15,000
Franchise Fee (High)
$30,000
Royalty %
4.5%
Marketing %
3%
Equipment Costs (Low)
$41,250
Equipment Costs (High)
$1,179,300
Working Capital
$133,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The Red Collection, LLC's financial statements show positive net income for recent years, with $15.5 million in 2024, $18.4 million in 2023, and $17.3 million in 2022. The company also maintains significant cash and cash equivalents, totaling $22.4 million as of December 31, 2024. The independent auditor has issued an unqualified opinion, indicating that the financial statements are presented fairly and there are no substantial doubts about the company's ability to continue operations. Although significant litigation related to sex trafficking claims has been filed against its parent company and affiliates, The Red Collection, LLC does not believe these matters will result in a material liability to its financial position or liquidity.
Financing Details
The Red Collection, LLC does not offer any direct or indirect financing to its franchisees. This means franchisees will need to secure their own funding for notes, leases, or other obligations through third-party lenders, as The Red Collection, LLC will not guarantee these financial commitments.
Performance Metrics
Total US Locations
5
Franchised Units
5
Corporate Units
0
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
4
Litigation Summary
The Red Collection, LLC itself has no direct litigation to report. However, its affiliate, Red Roof Franchising, LLC (RRF), is involved in several legal matters. One ongoing case, filed in October 2023 and amended in March 2025, involves a former franchisee suing RRF and Red Roof Inns, Inc. for alleged breaches of the franchise agreement, tortious interference, and violations of the New Jersey Franchise Practices Act. RRF and Red Roof Inns, Inc. deny these claims and are defending vigorously. There was also a concluded action in 2014 where the Maryland Securities Division found RRF had inadvertently violated Maryland franchise law by offering a franchise while its renewal application was pending. RRF entered a consent order and offered the franchisee a right to rescind, which was not exercised. Additionally, RRF filed two collection actions against franchisees in Georgia and Texas in 2024.
Bankruptcy History
The Red Collection, LLC itself has no bankruptcy history. However, its General Counsel, Gerrod Bede, previously served as General Counsel for ASTECH Engineered Products, Inc. ASTECH filed for Chapter 11 bankruptcy reorganization on July 15, 2022, and a plan of liquidation for the company was confirmed on May 20, 2024.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise for an additional ten-year period, The Red Collection franchisees must apply between 12 and 18 months before the initial term ends. Conditions for renewal include not being in default of any agreements, having paid all monetary obligations on time, completing updated training requirements for their manager and other designated employees, and agreeing to upgrade the hotel to meet the then-current brand standards at their own expense. Franchisees and their owners must also sign a general release of all claims against The Red Collection, LLC and its affiliates, pay a renewal fee equal to 50% of the then-current initial franchise fee, and execute the franchisor's current franchise agreement, which may have different terms.
Training & Support Program
Franchisor Assistance
Before opening, The Red Collection provides franchisees with site approval, initial training programs, and a loan of its operational manuals. It also designates the necessary computer and data communication systems and reviews the franchisee's renovation plans. The franchisor inspects the hotel to ensure it meets standards before authorizing the opening. During operation, The Red Collection offers continuing training, consultation, and advisory assistance on hotel management and marketing. It also establishes and maintains a reservation system and provides marketing, advertising, and promotional programs for the brand. The Red Collection may also improve the system or develop new products and services for franchisees to offer.
Initial Training Hours
55
Training Location
Initial training for The Red Collection franchisees is a blended program, including live webinars, on-demand learning modules, and on-site training at the franchisee's hotel. New Owner Orientation is held at the corporate offices in New Albany, OH.
Ongoing Support
The Red Collection provides ongoing training, consultation, and advisory assistance to franchisees in managing and operating their hotels. This includes required annual continuing education programs and may involve additional training if quality or service metrics decline. Franchisees also receive field support from a Regional Vice President of Operations or Franchise Operations Director, who may conduct quarterly visits if the hotel's performance is in the bottom quartile. The Red Collection also establishes and maintains a centralized reservation system and a marketing program, providing ongoing marketing, advertising, and promotions. Additionally, the franchisor holds regional conferences and periodic brand meetings for franchisees.
Franchise Requirements
Ideal Candidate Profile
The Red Collection seeks hotel franchise candidates with a proven history of guest satisfaction, strong guest service skills, and past success in property operations. They look for a commitment to elevated product and service standards and an understanding of the continuous nature of facility upgrades. Market qualifications are also considered, such as demand in the immediate area, types of competitive properties, location, visibility, accessibility, existing marketing efforts, prevailing rates, and proximity to business and leisure destinations like convention centers, universities, business parks, hospitals, and government centers.
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
The Red Collection designates a geographic area around each hotel that is negotiated with the franchisee and specified in the Franchise Agreement as the Exclusive Territory. The negotiation considers factors like the number of guest rooms, total competing hotels in the area, demand generators, population density, proximity to transportation, traffic patterns, access, visibility, and The Red Collection's future development plans. An Exclusive Territory can be as small as one or two blocks or as large as a small town.
Staffing Notes
The Red Collection franchisees are solely responsible for all employment decisions and functions at their hotel, including hiring, firing, training, compensation, and workplace policies. However, the business must be directly supervised on-premises by a manager who has successfully completed the franchisor's RED Advantage Training Program and meets manager specifications in the Manuals. The franchisor may require prior approval for third-party managers, who must sign confidentiality and non-competition agreements and dedicate their full-time efforts to managing the hotel without working for competitors.