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Knight's Inn Franchise Cost & Fees

Date of Incorporation: 1994

Franchising Since: 

Headquarters: Parsippany, New Jersey

Country: USA

Description: Knights Franchise Systems, Inc is a subsidiary of Wyndham Hotel Group, LLC, a Delaware limited liability company owned by Wyndham Worldwide Corporation, a Delaware corporation. The franchisor offers, sells and supports franchises for guest lodging facilities operating under the "Knights Inn" service mark. The Knights Inn System concept is directed toward the price conscious traveler, offering clean, comfortable rooms and limited amenities for room rates substantially below those charged by mid-market motels and hotels. A typical chain facility will have between 50 and 100 guest rooms. It generally will not offer room service, convention facilities, lobbies, or other upscale amenities that increase construction and operating costs.

Franchise Offer: The franchisee will operate a Knights Inn® guest lodging facility franchise offering overnight accommodations and related services. The franchisor offers to qualified franchisees a franchise to operate a chain facility at a single, defined location. The franchisee will use the assigned mark and the Knights Inn system to identify and operate the facility.

Financial Assistance: The franchisor may defer payment of the Initial Fee, if business circumstances warrant, at their sole discretion, for a fixed period that will generally not exceed one year. The franchisor does not presently offer any other direct financing and does not currently arrange financing from other sources.

Training and Assistance:
The franchisor offers Knights Inn Integration Training ("KIIT") at no additional charge for franchisees. This program is offered on-site through e-learning vehicles. The owner and/or general manager must complete the program within 30 days of the Opening Date of the facility or, if not then available, as soon as it is offered. Wyndham Hotel Group's Global Training Department offers a variety of mandatory and optional training programs, seminars, online training and other training resources. The initial and any replacement general manager or an owner/operator or other representative who exercises day to day operational authority of the facility must attend the Strategic Training for Exceptional Performance or Advanced Strategic Training for Exceptional Performance training program as well as any supplemental Internet-based training the franchisor may require.

Territory: The franchisor grants to the franchisee a protected territory in which the franchisor will not own, operate, or manage another chain facility utilizing the same service mark. In addition, the franchisor will not grant any additional license using the same service mark in the protected territory after the franchisee executes a Franchise Agreement with Knights Inn.
Term of Agreement and Renewal: The initial term begins on the date the franchisee signs the Franchise Agreement and ends at the end of the third license year. The term will automatically be renewed for up to four renewal terms of three years each unless either the franchisor or franchisee notifies the other at least 90 days before the expiration of the current Term that either one does not wish to renew the Agreement.  

Obligations and Restrictions:
The franchisor does not have to participate personally in the direct operation of the facility although the franchisor recommends that they do so. If the franchisor does not personally manage the facility, they must hire a management company or individual manager with significant training and experience in general management of similar lodging facilities to manage the facility. The manager must successfully complete the franchisor’s training program. The franchisor does not restrict the type of goods and services that are offered at the facility but the franchisee must offer accommodations that comply with System Standards and applicable law.

Total Number of Units: 285 units

Investment Tables:

Initial Investment:

Expenditure Low Amount
Application and Initial Franchise Fees $6,000 $6,000
Market Study $5,000 $12,000
Phase I Environmental Survey $2,500 $5,000
Design & Testing Fees $25,000 $75,000
Land Acquisition Not Estimated Not Estimated
Facility Construction $3,094,120 $3,808,148
Furniture, Fixtures and Equipment $388,185 $492,360
Signage $11,000 $31,000
Opening Inventory and Supplies $20,000 $30,000
Insurance $9,014 $11,518
Utility Deposits $5,000 $10,000
Market Study $5,000 $12,000
Grand Opening Advertising $20,000 $30,000
Technical Systems $33,200 $99,500
Miscellaneous Non-Tangible Asset Costs $55,000 $100,000
Construction Contingency $154,706 $190,407
Additional Funds for 3 Month Initial Period $51,000 $71,000
Total Estimated Initial Investment $3,879,725 $4,971,934
Total Cost Per Room $38,797 $49,719

 Ongoing Fees:

Name of Fee Amount
Combined Fees Facilities with up to 50 guest rooms: $20.80 per guest room per month. Facilities with more than 50 guest rooms: $20.80/room or 5% of “Gross Room Revenues" as the franchisee selects when entering into Franchise Agreement.
"Gross Room Revenues" include all revenues from the rental of guest rooms, including credit transactions, whether or not collected. Excludes charges for food and beverages, telephone, entertainment or taxes.
Reservation Fee $4.00 per reservation booked through the Central Reservation System. Includes the Chain's and its loyalty program's toll-free telephone numbers and websites.
Loyalty Program Charge Up to 5% of the Gross Room Revenues accrued by members in the guest loyalty program.
Taxes Amount assessed by federal, state and local tax authorities on Recurring Fees
Interest Lesser of 1.5% per month or the maximum rate permitted by law on the unpaid amount
Liquidated Damages Combined Fees in effect at the time of termination multiplied by the lesser of 12 or the number of months remaining in the unexpired current term at the date of termination.
Agency Commissions; International Sales Office Commissions; Member Benefits Commissions Up to 15% of Gross Room Revenues generated by Agency reservations; 15% of Gross Room Revenues generated from bookings from an International Sales Office's territory (includes Agency Commission), excluding voucher sales; 10% of Gross Room Revenues booked under Member Benefits program
Service Charge .5% of commissionable revenue booked by Agencies or International Sales Offices.
Global Distribution Systems and Internet $5.35 per reservation booked through the global distribution systems, $4.35 per reservation booked through a third-party Internet site plus agency commissions if applicable. No fees will be charged for bookings through the franchisor’s website or the Wyndham Rewards website.
Conference Fee $649 in 2007
Transfer Fee $2,000
Indemnification Costs Cost of defending and resolving indemnified claims. "Returned Check Fee" (currently $20) for checks the franchisee submits to which are dishonored by his or her bank or other financial institution.
Dispute Resolution Costs Costs, expenses, reasonable attorneys' fees
Reinspection Fee Currently $750 for the first reinspection and $1,000 for the second and any subsequent reinspection.
Guest Services Assessments $100.00 Guest Services Assessment plus resolution costs if the franchisee do not respond to and resolve a guest's complaint, and the guest continues to contact the franchisor; $60.00 Processing Fee per complaint in excess of the Annual Facility Allotment
PRM Maintenance and Support Fees $89 per month
Guaranteed Best Available Rate Processing Fee $60 plus must match the lower Internet rate less 10%
Service Interruption Fee Currently $200; $500 for the third or subsequent reactivations in any 12 month period
Fee for Broadband Internet Access Service $150 to $160 per month for 36 month term.

 Date of FDD: 2009

The above information has been taken from the UFOC/FDD and online sources of Knight's Inn.

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