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Ramada Worldwide Franchise Cost & Fees

Date of Incorporation: 1989

Franchising Since:  1989

Headquarters: Parsippany, New Jersey

Country: USA

Description: Ramada Worldwide Inc. is a Delaware corporation, a subsidiary of Wyndham Hotel Group, LLC, which is owned by Wyndham Worldwide Corporation. They own the proprietary Ramada System, providing transient guest lodging services to the public, including certain trade names, service marks and other commercial symbols.  They offer, sell, and support franchises for Ramada Chain guest lodging facilities.

Franchise Offer: Qualified individuals are offered a franchise to operate a Ramada Chain guest lodging facility at a single, defined location. There are two different types of facilities:
1)    A “Ramada” facility offers comfortable attractive accommodations at mid to upper mid-market rates in most markets, and has approximately 100 guest rooms.  A Ramada Facility features either a hospitality area with both leisure seating and breakfast seating and service areas as well as a “Ramada Convenience Mart”, or a full service restaurant and cocktail lounge. Ramada Facilities also have meeting rooms, bell service upon request, complimentary high speed internet access, laundry/valet service, a swimming pool and a fitness facility.
2)    A “Ramada Plaza Hotel” facility is an interior corridor structure of at least four stories.  It generally has at least 150 guest rooms, one or two restaurants, banquet and meeting facilities accommodating at least 100 people, a cocktail lounge, a board room, swimming pool and exercise facilities, a business center, a sundry shop, and bell, valet and room services.

Financial Assistance: The franchisor may defer payment of the Initial Fee, if business circumstances warrant, for a fixed period that will generally not exceed one year. In addition, the franchisor may offer certain development incentives for new construction and conversion chain facilities.  The amount of financing may not exceed 50% of equity investment in the facility under any of the programs.  The franchisee may participate in only one of these programs at each facility. The development incentive is a loan that is not subject to repayment unless the franchise terminates before the end of the first fifteen years of operation of the facility or a transfer occurs. Also, the PMC Commercial Trust offers financing conventionally as well as under the U.S. Small Business Administration (SBA) to qualified franchisees for acquiring, constructing, renovating, or refinancing a chain facility.  Up to 85% of the project cost can be financed under the SBA 504 program.  Franchisees may be required to have a larger equity interest in the project to meet program or credit guidelines.  These loans may be facilitated through a lending partner.

Training and Assistance: The franchisor will provide assistance in architecture and interior design plans.  They will provide training to the franchisee and the general manager.  They will provide on site assistance in preparing the facility for opening as a chain facility.

Territory: A protected territory will be granted 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 franchises using the same service mark in the protected territory. This area will be negotiated, and will take into account the many factors including but not limited to: population density, demographics, natural boundaries, and what other facilities may generate lodging demand for the franchisee’s facility.

Term of Agreement and Renewal: The length of the franchise term is 20 years for new construction facilities or 15 years for conversion facilities, beginning on the first day of the month after the opening date of the facility. There are no renewal or extension rights.  To renew, the franchisee must sign the franchisor’s then in effect franchise agreement, which may have materially different terms and conditions than the original agreement and pay the then in effect re-license fee, which is currently calculated  under the same formula as the initial fee.

Obligations and Restrictions: If the franchisee does not personally manage the facility, he/she 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 training program and undertake the confidentiality obligation in the Franchise Agreement. The manager must also attend any supplemental or remedial training sessions which the franchisor may mandate. The franchisee must offer accommodations that comply with system standards and applicable law. The franchisee must not affiliate the facility with another franchise system, reservation system or cooperative.

Total Number of Units: Nearly 900 untis around the world

Investment Tables:

Initial Investment:

 For a 100 Room Ramada New Construction Facility:

Name of Fee Low High
Application Fee; Initial Fee $36,000 $36,000
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  
Facility Construction $4,046,157 $5,355,208
Furniture, Fixtures and Equipment $655,970 $779,258
Signage $20,150 $43,000
Opening Inventory and Supplies $20,000 $30,000
Insurance $9,014 $11,518
Utility Deposits $5,000 $10,000
Grand Opening Advertising $20,000 $31,600
Training Expenses $2,700 $4,900
Technical System $87,000 $139,500
Miscellaneous, Non-Tangible Asset Costs $55,000 $100,000
Construction Contingency $202,308 $267,760
Additional Funds for 3 Month Initial Period $51,000 $71,000
Total Estimated Initial Investment $5,242,798 $6,971,744
Total Cost Per Room $52,428 $69,717

 

For a 150 Room Ramada Plaza New Construction Facility:

Name of Fee Low High
Application Fee; Initial Fee $53,500 $53,500
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  
Facility Construction $7,735,301 $8,925,346
Furniture, Fixtures and Equipment $1,452,639 $1,676,121
Signage $20,150 $43,000
Opening Inventory and Supplies $30,000 $45,000
Insurance $13,521 $17,277
Utility Deposits $5,000 $10,000
Grand Opening Advertising $20,000 $31,600
Training Expenses $2,700 $4,900
Technical Systems $120,500 $196,000
Miscellaneous, Non-Tangible Asset Costs $55,000 $100,000
Construction Contingency $386,765 $446,267
Additional Funds for 3 Month Initial Period $60,000 $80,000
Total Estimated Initial Investment $9,987,576 $11,719,012
Total Cost Per Room $66,584 $78,127

 

Ongoing Fees: 

Name of Fee Amount
Royalty 4% of Gross Room Revenues
RINA Services Assessment Fee 4.5% of Gross Room Revenues: consists of Marketing Contribution of 2.5% of Gross Room Revenues and Basic Reservation Fee of 2% of Gross Room Revenues
Loyalty Program Charge Up to 5% of the Gross Room Revenues accrued by a loyalty program member
Taxes Amount assessed by federal, state and local tax authorities on Royalties and RINA Services Assessment Fees
Interest Lesser of 1.5% per month or the maximum rate permitted by law on the unpaid amount
Extension Fee $2.00 per room per month
Training Fees and Expenses Tuition is currently $1,250 for general manager orientation and $825 for owner orientation. Tuition for initial training is subject to increase if the franchisee or general manager does not attend a program by the deadline in the Franchise Agreement. Franchisee pays the tuition then in effect for subsequent training for replacement personnel.
Public Offering Fee $15,000
Liquidated Damages Greater of $2,000 per guest room or total Royalties and RINA Services Assessment Fees for 24 months before franchise termination. For pre-opening default, reduced to one-half of formula amount, payable 10 days after termination notice is sent.
Condemnation Payments Recurring Fees for one year after notice of condemnation
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 Service Charge - .5% of commissionable revenue booked by Agencies or International Sales Offices
GDS and Internet Booking Fees $5.35 per reservation booked through the global distribution systems ("GDS"). $4.35 per reservation booked through a third party Internet site (not booked through a GDS), plus agency commissions if applicable. No fees will be charged for bookings through our website or the Wyndham Rewards website.
Chain Conference Fee $995 in 2008. An additional fee is charged for each attendee.
Rooms Addition Fee Now $350 for each guest room added to the facility
Relicense Fee Same as Initial Fee
Indemnification Costs Cost of defending and resolving indemnified claims. Includes "Returned Check Fee" (currently $20) for checks submitted which are dishonored by the franchisee’s bank or other financial institution.
Audit Fee $1,000, subject to increase on a Chainwide basis to cover the franchisor’s costs, which will not exceed 5% per year on a cumulative basis
Courtesy Lodging Employee rate for the franchisor’s representatives on business
Dispute Resolution Costs Costs, expenses, reasonable attorneys' fees
Reinspection Fee and Costs Currently $1,000 for the first reinspection and $1,500 for the second and any subsequent reinspection
Guest Services Assessments; Processing Fee $100.00 Guest Services Assessment plus resolution costs if the franchisee does not respond to a guest's complaint within 7 business days after notified and the guest contacts a second time; $60.00 Processing Fee per complaint in excess of the Annual Facility Allotment
PMS Maintenance, Support and Service Fee $38 - $50 per room per year, depending on the PMS system purchased, plus $ 1,100 per year for credit card interface and $ 1,000 per year for other interfaces.
Fee for Broadband Internet Access Service $150 to $ 160 per month for 36 month term.
Guaranteed Best Available Rate Processing Fee $60 plus franchisee must match the lower Internet rate less 10%
RMA Fees $15 per guest room per year, up to a maximum of $3,000 per year.
Service Interruption Fee $200; $500 if the franchisor must re¬activate the franchisee’s service three or more times in any 12 month period.
ResCentral Call Handling Fee $1.65 per transferred call with $50 minimum per month
 

 Date of FDD: 2009

 

The above information has been taken from the UFOC/FDD and online sourses of Ramada Worldwide.
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