Wingate by Wyndham Franchise

Financing Details

Wingate Inns International, Inc. may defer payment of the Initial Fee, typically for about 90 days or until the facility opens, whichever comes first. This deferral does not accrue interest unless payments are late, and it generally doesn't require additional security. If deferred, the Initial Fee Note can be paid off early without penalty, but a default will accelerate payment and incur interest. Wingate Inns International, Inc. also offers "Development Incentives" as a loan for new construction and conversion facilities. These loans are not subject to repayment unless the franchise agreement terminates or the facility is transferred before the end of the term. A portion (1/20th) of the original loan amount is forgiven annually. If a default occurs, payment is accelerated, and interest is charged. Eligibility for these incentives is determined by factors such as the number of rooms, location, market overview, demand drivers, and a feasibility study. Special programs, "Women Own the Room" (WOTR) and "Black Owners & Lodging Developers" (BOLD), provide tailored Development Incentives and additional support to qualifying women and Black entrepreneurs, respectively, under similar loan terms. Furthermore, Wingate Inns International, Inc., in collaboration with Sculptor Real Estate Acquisition LP, offers a "Third Party Financing Program." This program provides senior mortgage loans (Sculptor Loans) for new construction facilities, covering up to a 70% loan-to-cost ratio, with Wyndham Hotel Group providing a partial guaranty. Additionally, Wingate Inns International, Inc. or Wyndham Hotel Group may offer mezzanine or Development Incentive loans (Wyndham Loans) for up to an additional 5% loan-to-cost, totaling up to 75% financing. These loans carry specific interest rates (SOFR plus 5.9%, with a 3.5% floor), origination fees, and exit fees. They typically have a 36-month term, extendable for two 12-month periods, with interest-only payments during the term. Guarantors are required for these loans, and specific collateral assignments are necessary.

Litigation Summary

Wingate Inns International, Inc. and its affiliates have disclosed a total of 11 litigation cases. Currently, there are two pending cases. One is a class action lawsuit filed in Canada in 2014, Norma Knuth v. Wyndham Worldwide Corporation, et al., which alleges consumer protection violations and fraud related to "Destination Marketing Fees" charged by hotels, seeking over $400 million in damages. The other pending case, filed in New Jersey in 2023, involves Wingate Inns International, Inc. and an affiliate suing a franchisee for breach of contract and seeking liquidated damages, with the franchisee having counterclaimed for breach of contract, fraud, and franchise law violations. Wingate Inns International, Inc. also commenced three lawsuits against franchisees for non-payment of outstanding amounts owed, one in February 2023, another in February 2023, and one in January 2024. Prior resolved litigation includes cases concerning FTC Rule violations, breach of contract, misleading resort fees, antitrust claims, Minnesota Franchise Act violations, surreptitious recording of phone calls, cyberattacks, and disputes over service fees. Many of these resolved cases involved significant settlements or stipulated orders.

Renewal Conditions

Wingate by Wyndham franchisees do not have an automatic right to renew their franchise agreement. However, if Wingate Inns International, Inc. and the franchisee mutually agree to renew, the franchisee must apply for a renewal between six and nine months before the current agreement expires. The franchisee will then be required to sign Wingate's then-current franchise agreement, which could have significantly different terms and conditions. Additionally, the franchisee must pay the then-current Relicense Fee, which is calculated using the same formula as the Initial Fee, complete any required property improvement plans, and execute a general release of Wingate and its affiliates.

Staffing Notes

Wingate by Wyndham franchisees are solely responsible for all employment decisions, including hiring, firing, scheduling, and setting remuneration for their staff. If the franchisee chooses not to personally manage the facility, they must hire a management company or an individual manager who has significant training and experience in general management of similar lodging facilities. Wingate Inns International, Inc. reserves the right to require a franchisee to retain an approved third-party manager if the franchisee lacks substantial hotel management experience or is receiving a Development Incentive. All personnel in positions designated by Wingate Inns International, Inc. are required to attend and successfully complete initial training programs and any other mandated training. This includes specific web-based training for general managers and front desk associates on the Wyndham Rewards program, Human Trafficking Prevention Training, and Count on Us training, as well as opening training for staff.