INDUSTRY BENCHMARK · 37 SYSTEMS · FISCAL 2023–2025
Are hotels & hospitality franchises a good investment?
Across 33 hotels & hospitality franchise systems, the median system's exit rate in its latest fiscal year was 4.0%, and its opening rate 5.0%. Pooled across systems, with no system counting for more than 20% of the weight, the exit rate was 6.8%. QUALITY INN alone is 29% of the sector's franchised base. Median franchise fee: $58K; median royalty: 5.5%; median total investment: $8.8M–$17.7M.
There is no official “hotels & hospitality franchise failure rate.” What franchisors must disclose, in the Item 20 outlet tables of the FDD, is how many franchised outlets were terminated, not renewed, or “ceased operations — other reasons” each year. The exit rate here is that count divided by franchised outlets open at the start of a single fiscal year. It counts exits for any reason (some are retirements, sales, relocations or non-renewals) and misses struggling units that were sold as transfers.
4.0%
33 systems · latest fiscal year each
6.8%
QUALITY INN alone is 29% of the sector's franchised base.
5.0%
272 outlets opened in total
37
FDD filed within 24 months
5,502
at latest fiscal year end
$58K
FDD Item 5
5.5%
FDD Item 6
$8.8M–$17.7M
FDD Item 7
26/37
systems disclosing an FPR
SOURCE: FDD ITEM 20 OUTLET TABLES FILED WITH STATE REGULATORS (MINNESOTA CARDS) · 37 SYSTEMS · 37 FILINGS · FISCAL 2023–2025
| Signal | Brand | Verdict |
|---|---|---|
| STRONGEST RECORD | WOODSPRING SUITES | Strong |
| STRONGEST RECORD | MAINSTAY SUITES | Strong |
| STRONGEST RECORD | HYATT PLACE HOTEL | Steady |
| WEAKEST FILED RECORD | Radisson | Weaker |
| WEAKEST FILED RECORD | CLARION HOTEL | Weaker |
| WEAKEST FILED RECORD | ECONO LODGE | Weaker |
VERDICTS FROM EACH BRAND'S OWN FDD ITEM 20 FILING · METHODOLOGY
Hotels & Hospitality franchise questions, answered from the filings
How many hotels & hospitality franchised outlets leave their systems each year?
There is no official failure rate. FDD Item 20 tables report how many franchised outlets were terminated, not renewed, or "ceased operations — other reasons" each year. Across 33 hotels & hospitality systems, the median system's exit rate in its latest fiscal year (fiscal 2023–2025) was 4.0%; pooled across systems, with no system counting for more than 20% of the weight, it was 6.8%. QUALITY INN alone is 29% of the sector's franchised base. Not every exit is a failure: some are retirements or sales.
How much does a hotels & hospitality franchise cost?
Across the latest FDD filings of 37 hotels & hospitality systems, the median initial franchise fee is $58K (Item 5) and the median total investment range is $8.8M–$17.7M (Item 7).
What royalty do hotels & hospitality franchises charge?
The median ongoing royalty across 37 hotels & hospitality franchise systems is 5.5% of gross sales, per Item 6 of their latest FDD filings.
Are hotels & hospitality franchises growing or shrinking?
In each system's latest Item 20 fiscal year (fiscal 2023–2025), the median hotels & hospitality system opened new franchised outlets at 5.0% of its starting base and lost 4.0% to exits. For the median system, openings outpaced exits.
What is the healthiest hotels & hospitality franchise?
Of the hotels & hospitality systems rated from their FDD Item 20 tables, WOODSPRING SUITES has the strongest record (verdict: Strong). A verdict describes the filed record, not a recommendation to buy.
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