Wyndham Garden Franchise

Financing Details

Wyndham Franchisor, LLC offers potential franchisees several financing options. Franchisees may defer payment of the Initial Fee, typically for a short term (90 days or until the facility opens). This deferral does not accrue interest unless there is a payment default and requires the franchisee and their owners to sign an Initial Fee Note. The franchisor also provides Development Incentives for new construction and conversion facilities. These are loans that are gradually forgiven over the term of the Franchise Agreement, with either 1/20th or 1/15th of the original amount forgiven annually, and they bear no interest unless there is a default. There are specialized Women Own the Room ("WOTR") Development Incentives, targeting up to $2,500 per guest room (not exceeding 50% of the franchisee's equity investment) for women-owned franchisees, and Black Owners & Lodging Developers ("BOLD") Support, which may also include a Development Incentive. In addition, Wyndham Franchisor, LLC participates in a Third Party Financing Program with Sculptor Real Estate Acquisition LP. This program offers senior mortgage loans from Sculptor for hotel construction (up to a 70% loan-to-cost ratio) and may include additional mezzanine or Development Incentive loans from Wyndham Hotel Group (the franchisor's immediate parent) for up to a 5% loan-to-cost ratio, bringing the total financing up to a 75% loan-to-cost ratio. These loans typically have an interest rate that is the greater of Term SOFR or 3.5%, plus 5.9%, along with a 1.25% origination fee. The loans are payable interest-only over a 36-month term, with options for extensions. An exit fee of 0.75% of the maximum principal is also charged, and Sculptor requires a minimum 1.25x return on the loan principal.

Litigation Summary

Wyndham Franchisor, LLC is currently involved in two pending lawsuits. One case, filed in July 2023, is a breach of contract claim against Avonos Airport, LTD and Stephen Ewaskiw, with a counterclaim filed by the defendants. The second pending case is a class action suit from December 2014, alleging that Wyndham Worldwide Corporation and its affiliates (including Wyndham Franchisor, LLC) charged an undisclosed "Destination Marketing Fee" in Canada. The franchisor and its affiliates have also been involved in several resolved litigations. These include a class action regarding alleged misleading resort fees that was settled in February 2020, a lawsuit alleging a violation of FTC rules and breach of contract settled in May 2016, and a class action concerning the alleged surreptitious recording of telephone conversations with consumers that was dismissed in October 2016. Other resolved cases include an FTC lawsuit related to cyberattacks dismissed in December 2015, an antitrust lawsuit concerning online hotel room sales settled in February 2019, and a Minnesota Franchise Act violation claim that was settled in August 2015. Additionally, a class action regarding telephone conversation recording was dismissed in November 2015, and a breach of contract suit related to service fees was dismissed in January 2015. One litigation against a terminated franchisee for non-payment was filed in January 2023 and is pending.

Renewal Conditions

Wyndham Garden franchisees generally do not have automatic renewal rights. However, if required by applicable law, a franchisee may apply for a new franchise agreement by providing notice 6 to 9 months before their current agreement expires. To qualify for renewal, franchisees must meet the then-current requirements for new applicants, which could involve signing a new agreement with potentially different terms and fees, executing a general release of the franchisor and its affiliates, completing a property improvement plan, and paying a standard renewal fee.

Staffing Notes

Wyndham Garden requires franchisees to make all employment decisions for their facility, including recruitment, hiring, firing, scheduling, and compensation. All personnel employed in designated positions must attend and successfully complete the franchisor's initial training programs, as well as any other required training. The general manager must complete the Hospitality Management Program, Human Trafficking Prevention Training, and Count on Us training. All other team members are required to complete specific Count on Us trainings, which include modules on introduction, overview, public space and guest room cleaning, laundry procedures, room attendant safety, and food service if applicable. For new construction and conversion hotels, staff also receives mandatory Opening Training on-site. If the franchisee does not personally manage the facility, they must hire a management company or individual manager with significant training and experience in similar lodging facilities.