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Microtel Inns and Suites Franchise Cost & Fees

Date of Incorporation: 1995

Franchising Since: 1995

Address: Atlanta, Georgia

Country: USA

Description: The franchise operates all new construction budget Microtel Inns & Suites hotels, which feature modern up-scale accommodations, down-sized guest rooms, or one-room suites, and budget room rates.

Franchise Offer: The franchisor offers franchises for the right to operate all-new construction, economy/budget lodging facilities that use the Hotel System and are identified by the proprietary marks. Microtel Inn & Suites contain single rooms, double rooms and suites.

Financial Assistance: Under certain circumstances the franchisor may provide financial assistance to selected franchisees to help them develop hotel properties or may permit the franchisee to pay the application fee over a period of time instead of in a lump sum. Except as outlines above, the franchisor does not provide any financing arrangements for franchisees, either directly or indirectly.

Training and Assistance: The franchisee must attend the initial training program, before the opening or within 90 days after the opening of the hotel. The initial training program will consist of (i) classroom instruction on subjects relating to our operations manual; (ii) familiarization with our personnel and management; and (iii) a basic review of your front office, housekeeping, maintenance, and safety program responsibilities. It is based at headquarters in Atlanta, Georgia.

Territory: The franchisee is granted an exclusive territory. The territory is based on factors including, but not limited to, market size, size of the hotel, proximity to other budget lodging facilities, and other demand generators. The size may range from a mile or less around the Hotel to several miles around the Hotel.

Term of Agreement and Renewal: The initial franchise term is for a length of 20 years, with an option to renew for an additional 10 years.

Obligations and Restrictions: The franchisee must maintain direct management responsibility over the hotel; however, it is not required that they personally supervise the hotel.    

Total Number of Units: 273 franchised units at the end of 2007

Investment Tables:

Initial Investment: 

Name of Fee Low High
Application Fee Greater of $40,000 or $400 per room  
Architect fees $40,000 $60,000
Re-construction costs $200,000 $400,000
Leasehold Construction $3,500,000 $5,400,000
Furniture, Fixtures, Equipment $535,000 $650,000
Insurance $20,000 $50,000
Business permits, utility deposits $10,000 $30,000
Training $5,500 $10,500
Opening local Advertising $10,000 $20,000
Telephone Reservation Hook-up $300 $1,000
Opening Inventory & Supplies $65,000 $70,000
Mandatory On-premises sign $25,000 $50,000
Additional Funds – 3 months $50,000 $75,000
Total $4,500,800 $6,856,500

  Ongoing Fees: 

Name of Fee Amount
Royalty Fees 5% or 6%  of Gross  Room Revenue
Marketing/Reservation Contributions 2% or 3%  of Gross  Room Revenue
Cooperative Advertising Varies
Audit Understated amount plus accounting and attorneys' fees
Interest    Lesser of 1.5% per month or the maximum rate permitted by law on the unpaid amount
Accounting Cost   of   accounting services
Expansion Fees $2,500 per request
Transfer Fees $10,000
Proposed securities offering fee $5,000
Liquidated Damages upon Termination, Condemnation or Casualty $3,000 per approved Guest Room or 36 times average monthly fees (royalty and marketing/ reservation/contribu¬tion) payable under License Agreement
Re-identification fees $5,000 per day
Renewal Fee One-half then-current Application Fee
Indemnification Varies
Trust International, Inc. Reservation Set-up Fee $446
Trust International, Inc. 2-Way Interface Fee $0.26 per each reservation uploaded to Trust via the 2-way interface.
Global Distribution System  Provider Fees and Processing Agent fees Processing agent fee of $1 per transaction
Transaction fee for central pay on-line travel agent commission settlement program $0.32 per travel agency booking
Facsimile Transmission of Reservations $1.00 per reservation
Testing of New Product/Supplies Franchisor’s costs if they seek reimbursement
Attorneys' Fees As incurred
Tax on Gross Receipts Actual costs
Call Waiting Charge Up to $2 per call
Fee for annual conference Currently $599 per attendee
Branded hotel e-mail accounts for the GM and Sales Every hotel will be charged $15 annually
Payment Card Industry (PCI) Compliance Quarterly Network Scans by PCI Auditors $25.00 per year per Hotel that will cover 4 scans per year for 1 internet provider address

 Date of FDD: 2008

The above information has been taken from the UFOC/FDD and online sources of Microtel Inns and Suites.
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