Verified — real FDD extraction
SBA-eligible · directory code S1373 since 2017
QUALITY INN
Other · independent · est. —
Quality Inn is a midscale hotel brand in the Choice Hotels system offering value-priced rooms and limited amenities such as free breakfast. A franchisee owns and operates the hotel property with its own staff, paying brand fees for the flag, reservation system, and standards, and serving budget-minded travelers.
QUALITY INN net unit count declined -3.2% from 2023–2025 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & steady
Distress
A real track record with an unremarkable region of the ledger: neither the growth nor the exits stand out, for better or worse.
Exit rate · latest year
6.1%
fiscal 2025, per Item 20
Cost to open
$332K–$1.9M
Item 7 total investment range
SBA loan defaults
9.0%
vs 14.8% avg across rated brands
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2023–2025
Survival record
FDD Item 20 · outlet status by year
In fiscal 2025, 99 of 1,621 franchised outlets left the system — a 6.1% annualized exit rate. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Outlets at start | 1,633 | 1,617 | 1,621 |
| Opened | 48 | 54 | 44 |
| Transfers | 113 | 81 | 74 |
| Terminations | 6 | 4 | 14 |
| Non-renewals | 4 | 7 | 12 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 54 | 39 | 73 |
| Outlets at end | 1,617 | 1,621 | 1,566 |
| Net change | -16 | +4 | -55 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 1,220 SBA-backed loans to QUALITY INN franchisees since 1992. Of the 699 that have resolved, 9.0% were charged off (defaulted) rather than paid in full, versus 14.8% across 570 rated brands.
9.0%
63 of 699 resolved defaulted
68.8%
avg. charged-off $ ÷ approved $
6.2%
default rate × loss severity
$2,617,840
what recent franchisees borrowed
86 mo
approval → charge-off, defaulted loans
72 vs 90
distinct banks still lending
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO QUALITY INN BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $45K franchise fee (Item 5) and a total investment of $332K–$1.9M (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$332K–$1.9M
all-in investment range
Franchise fee (Item 5)
$45K
upfront, one-time
Royalty (Item 6)
5.25%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$53K
5.25% of sales, before profit
Over a 10-yr term
$525K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for QUALITY INN with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 502 wage cases against operators of this system, recovering $2.3M in back wages for 3,685 workers, including 15 child-labor cases. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
502
Back wages owed
$2.3M
Employees affected
3,685
Since 2020
32
15 of these cases involved child-labor violations, covering 50 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual QUALITY INN franchisees — separately owned businesses operating under the brand name — not QUALITY INN itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2026.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
Premier Bank sues owner of Eagan Quality Inn & Suites over loan payments
news:The Business Journals · 30mo ago
40 people must relocate after Rutland’s Quality Inn closes due to health violations
news:VTDigger · 64mo ago
Quality Inn closing immediately, 30 left jobless
news:Pal-Item · 142mo ago
12 questions to ask a QUALITY INN franchisee
Built from this brand's own disclosures · take it to your validation calls
The franchisor will give you a list of owners to call. Most buyers ask whether they like it. These are the questions built from what QUALITY INN has actually disclosed — each one carries the number it came from, so you can tell whether the answer squares with the record.
- 01
QUALITY INN’s own Item 20 shows 99 of 1,621 franchised outlets left the system in fiscal 2025 — about 6.1%. Do you know any of those owners, and do you know why they left?
A franchisor will call these “transitions.” An owner three doors down usually knows whether they sold at a profit or handed the keys back.
FDD Item 20 · FY2025
- 02
74 units transferred to new owners in fiscal 2025. When you look at those, were they people cashing out a good business — or getting out of a bad one?
Transfers count as neutral in every ranking. They are the single easiest place to hide distress.
FDD Item 20 · FY2025
- 03
The system went from 1,617 units to 1,566 over 3 disclosed years. What's the explanation you've been given, and do you believe it?
A shrinking system means fewer owners funding the ad fund and support staff you're paying for.
FDD Item 20 · FY2023–FY2025
- 04
Of 699 SBA loans to QUALITY INN franchisees that have finished, 9.0% were charged off — the borrower didn't repay. Did you finance with an SBA loan, and how close did your first two years come to trouble?
This is the lender's view of failure, from public federal records, and it is independent of anything the franchisor discloses.
SBA 7(a)/504 loan record, FY1991–present
- 05
Item 7 says the low end to open is $332K, but the average recent SBA loan to a QUALITY INN franchisee was $2.6M. What did you actually spend to open, all in?
Lenders size loans to real project costs. A large gap between the disclosed floor and what banks actually fund is the most common way buyers get underfunded.
FDD Item 7 vs SBA approvals FY2020+
- 06
You pay 5.3% royalty on gross sales, plus the ad fund, before any of your own costs. On your actual revenue last year, what did you take home as the owner — not revenue, take-home?
Royalty is charged on sales, not profit. This is the number the brochure never shows and the one your life actually runs on.
FDD Item 6
- 07
QUALITY INN makes an earnings claim in Item 19. Does your unit look like that number — and do you know which units they included to build it?
Item 19 is legal to build from a flattering subset. Ask whether they excluded new units, closed units, or company stores.
FDD Item 19 · 2026
- 08
How many months did it take to cover your own costs, and how much cash did you burn getting there?
Ramp-to-breakeven working capital is the most underestimated line in any franchise purchase, and the most common reason otherwise-good units fail.
Not disclosed in any FDD — ask an owner
- 09
Item 3 discloses 141 legal matters. Do you know what those were about, and were any brought by franchisees?
Franchisee-brought suits over territory, fees or support tell you how the franchisor behaves when there's a disagreement.
FDD Item 3 · 2026
- 10
What does the franchisor charge for that you didn't expect — required tech fees, mandatory remodels, approved-supplier pricing?
Required spending appears across Items 6, 8 and 11 rather than in one place, so buyers routinely miss the total.
FDD Items 6, 8, 11
- 11
If your agreement came up for renewal tomorrow at current terms, would you sign again?
The single most predictive question you can ask. A hesitation is the answer.
Ask every owner you speak to
- 12
Who else should I call — including someone who left?
The franchisor's list is curated by definition. Former franchisees are where the unflattering truth lives, and current owners usually know how to reach them.
Ask every owner you speak to
Want this as a checklist you can take to the calls?
I'll email you the printable version, and tell you if QUALITY INN’s numbers move — a new filing, a rising exit rate, a distress signal. Unsubscribe in one click.
A broker is paid by the franchisor to place you. I'm paid by you — and the job is pressure-testing QUALITY INN's numbers, including talking you out of a bad deal.
This page is what buyers see before they call you for validation. If the record above is wrong — or right in a way the numbers can't show — say so. Corrections are checked against the filings; nothing you write is published with your name unless you agree to it.
QUALITY INN franchise questions, answered from the filings
What percentage of QUALITY INN franchises closed last year?
In QUALITY INN's latest FDD Item 20 (fiscal 2025), 99 of 1,621 franchised outlets left the system — an annualized exit rate of 6.1%. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a QUALITY INN franchise cost?
Per QUALITY INN's 2026 FDD, buying in requires an initial franchise fee of $45K (Item 5) and a total initial investment of $332K–$1.9M (Item 7).
What royalty does QUALITY INN charge?
QUALITY INN charges an ongoing royalty of 5.3% of gross sales, per Item 6 of its 2026 FDD.
Does QUALITY INN disclose earnings (Item 19)?
Yes — QUALITY INN makes a financial performance representation in Item 19 of its 2026 FDD. Read it closely: franchisors choose which units and which metrics to include.
How often do SBA loans for QUALITY INN franchises default?
Across 1,220 SBA-backed loans to QUALITY INN franchisees since 1992, 63 of the 699 that have resolved were charged off — a 9.0% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.