Travelodge Franchise

Financing Details

Travelodge Hotels, Inc. offers several direct financing options to its franchisees. These include: 1. Initial Fee Deferral: The company may defer the Initial Fee payment for a short term, typically 90 days or until the facility opens. Payments are usually made in one to three installments without interest, unless the payment becomes overdue, in which case an 18% annual interest rate applies. No security is generally required. 2. Development Incentive Financing: This is a loan provided for new construction and conversion facilities. It is not repaid unless the franchise agreement terminates early or the facility is transferred. A portion of the loan (1/20th or 1/15th of the original amount, depending on the franchise term) is forgiven annually until the note is fully discharged at the end of the term. If default occurs, the interest rate is 18% per annum. Disbursement is contingent on meeting various conditions, including a final credit review, facility opening, completion of pre-opening improvements, and payment of the Initial Fee. The incentive can be disbursed in cash or to a third party on the franchisee's behalf. 3. Women Own the Room (WOTR) Development Incentive: This special program targets women entrepreneurs, offering a Development Incentive of up to $2,500 per guest room, not exceeding 50% of the franchisee's equity investment. It also provides personalized operational guidance. The terms and conditions of the general Development Incentive apply. 4. Black Owners & Lodging Developers (BOLD) Support: This program offers customized support, which may include a Development Incentive, for Black entrepreneurs pursuing hotel ownership, with the same terms as the general Development Incentive. Franchisees can also request a Lender Notification Agreement for their selected lenders, but Travelodge Hotels, Inc. is not obligated to enter into any such agreement. The franchisor does not sell, assign, or discount these financing arrangements to third parties.

Litigation Summary

Travelodge Hotels, Inc. and its affiliates have a history of involvement in various legal proceedings. Currently, Travelodge Hotels, Inc. is a defendant in an ongoing class action lawsuit in Saskatchewan, Canada, filed in 2014 (Norma Knuth v. Wyndham Worldwide Corporation, et al.), which alleges that hotels charged an undisclosed 'Destination Marketing Fee' to Canadian guests and seeks significant damages. Additionally, Travelodge Hotels, Inc. has three active lawsuits filed in 2023 against current or terminated franchisees for non-payment of outstanding amounts owed: TRAVELODGE HOTELS, INC. v. MANTERA EQUITY, LLC (filed May 2023), TRAVELODGE HOTELS, INC. v. JIAAN HOSPITALITY, INC. (filed February 2023), and TRAVELODGE HOTELS, INC. v. DREAM LAND HOSPITALITY LLC (filed February 2023). In the past, there were several resolved cases, primarily from before 2021, against Travelodge Hotels, Inc. and its affiliates. These included claims for negligent misrepresentation and deceptive trade practices, wrongful termination of franchise agreements, class actions concerning resort fees, online advertising, unauthorized phone call recording, and FTC claims related to cyberattacks. Travelodge Hotels, Inc. states that apart from the mentioned actions, no other litigation needs to be disclosed. It also notes that current and former franchisees may have signed confidentiality provisions, restricting their ability to discuss their experiences.

Renewal Conditions

Travelodge Hotels, Inc. explicitly states that franchisees do not have renewal or extension rights for their franchise agreement. However, if the franchisor and franchisee were to mutually decide to renew the franchise (despite no inherent right to do so), the franchisee would be required to: (i) sign the franchisor's then-current franchise agreement, which could have significantly different terms and conditions (including operating standards and fees) compared to the original agreement, and (ii) pay the Relicense Fee that is in effect at that time, which is currently calculated using the same formula as the Initial Fee. Additionally, the franchisee would need to execute a general release of Travelodge Hotels, Inc. and its affiliates, in a form acceptable to the franchisor, and complete any required property improvement plans.

Staffing Notes

Travelodge Hotels, Inc. does not strictly require the franchisee to personally manage the facility, but recommends it. If the franchisee opts not to, they must hire a manager or management company with substantial experience in managing similar lodging facilities, and this manager must successfully complete the franchisor's training program. Travelodge Hotels, Inc. reserves the right to require the retention of an approved third-party manager if the franchisee lacks significant hotel management experience or receives a Development Incentive. All hotel personnel in designated positions are mandated to attend and successfully complete initial and ongoing training programs provided by the franchisor. This includes the general manager's participation in the Hospitality Management Program (approximately 34 hours) and both general managers and all team members completing Human Trafficking Prevention Training and Count on Us® Training modules. Opening Training for staff is provided on-site for new construction facilities or those requiring significant architectural improvements. The franchisor offers continuing education for the entire hotel team. Franchisees are solely responsible for all employment decisions, including recruitment, hiring, firing, scheduling, and remuneration of their employees.