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Travelodge Franchise Cost & Fees

Date of Incorporation: 1996

Franchising Since: 
1996

Headquarters:
Delaware

Country: USA

Description: Travelodge Hotels, Inc is a subsidiary of Wyndham Hotel Group, LLC, a Delaware limited liability company which is owned by Wyndham Worldwide Corporation, a Delaware corporation. A Travelodge Inn facility features design, decor, guest room furnishing, and other standards which are similar to those of a Travelodge Hotel facility. However, it is usually smaller in size and because restaurant, bell and similar services are not provided, room rates are generally lower. A Travelodge Inn & Suites facility is comprised of suites and inn rooms and offers the same amenities as a Travelodge Inn facility. A Travelodge Hotel facility is a full-service facility, offering comfortable, attractive accommodations at mid to upper mid-level rates. A typical Travelodge Hotel facility has a full-service restaurant and cocktail lounge (where legally permitted), a meeting room having a minimum of 600 square feet, bell service upon request, laundry/valet service, and a swimming pool. A Travelodge Suites Hotel facility is mostly comprised of two-room suites and offers the same amenities as a Travelodge Hotel facility.

Franchise Offer:
Under the franchise agreement the franchisors offers a license to operate a Travelodge Chain guest lodging facility at a single, defined location. The franchisee will operate a Travelodge® guest lodging facility franchise offering overnight accommodations and related services.

Financial Assistance: The franchisor may defer payment of the initial fee, if business circumstances warrant, in their sole discretion, for a fixed period that will generally not exceed one year. The deferral is usually for a short term such as 90 days, or until the facility opens as a chain facility, whichever occurs first.

Training and Assistance:
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 Travelodge Hotels.

Term of Agreement and Renewal: The term of the franchisee agreement is 20 years for a new construction facility and 15 years for a conversion facility. The franchisee is not given any renewal or extension rights.

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: The total number of franchised for year ended 2008: 380

Investment Tables:

Initial Investment:

Name of Fee Low High
Application Fee, Initial Fee $36,000 $36,000
Facility Improvements $110,810 $168,480
Furniture, Fixtures and Equipment $100,000 $150,000
Signage $4,500 $27,000
Opening Inventory and Supplies $6,000 $25,000
Insurance $9,014 $11,518
Grand Opening Advertising $20,000 $31,600
Training Expenses $2,700 $4,900
Technical Systems $18,000 $119,500
Miscellaneous Non-tangible Asset Costs $25,000 $45,000
Additional Funds for 3 Month Initial Period $51,000 $61,000
Total Estimated Initial Investment $383,024 $679,998
Total Cost per Room $3,830 $6,800

 Ongoing Fees:

Name of fee Amount
Royalty 4.5% of Gross Room Revenues.
System Assessment Fee Includes a Marketing Contribution of 2% of Gross Room Revenues, a Daily Guest Room Charge of 100 per room per day for the first 100 rooms at the Facility and 5 cent per room per day for each additional guest room, and a Basic Reservation Fee of 2% of Gross Room Revenues.
Loyalty Program Charge Up to 5% of Gross Room Revenues accrued by a loyalty program member.
Taxes Amount assessed by federal, state and local tax authorities on Royalties and System 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 the general manager to attend general manager orientation and $825 for the franchisee to attend owner orientation. Tuition for the franchisee’s initial training is subject to increase if the franchisee or the general manager does not attend a program by the deadline under the Franchise Agreement.    The franchisee must pay the tuition then in effect for subsequent training sessions for replacement personnel.
Public Offering Fee $15,000
Liquidated Damages Liquidated damages will be equal to the greater of $2,000 per guest room or total   Royalties and System Assessment Fees for 24 months. 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 reservation; 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 0.5% of commissionable revenue booked by Agencies or International Sales Offices
Property to Property Incentive Sales Commissions 10% of Gross Room Revenues
Service Charge Service Charge - .75% of commissionable revenue (0.5% for departures beginning 9/15/06)
GDS and Internet 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 the franchisor’s website or the Wyndham Rewards website.
Chain Conference Fee $895 in 2007.
Rooms Addition Fee Now $350 for each guest room added to Facility
Relicense Fee Same as Initial Fee
Indemnification Costs Cost of defending and resolving indemnified claims. Includes "Returned Check Fee" (currently $20) for checks the franchisee submits to the franchisor which are dishonored by the franchisee bank or other financial institution.
Audit Fee $1,000 subject to increase on a Chainwide basis to cover the franchisor costs, which will not be more than 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
Re-inspection Fee and Costs Currently $ 1,000 for the first re-inspection and $ 1,500 for the second and any subsequent re-inspection
Guest Services Assessments; Processing Fee $100.00 Guest Services Assessment plus resolution costs if the franchisee does 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
PMS Maintenance, Support and Service Fee $34.65 - $50 per room per year, depending on the PMS system the franchisee purchases, plus up to $ 1,100 per year for each interface, depending on the PMS System.
Fee for Broadband Internet Access Service $150 to $160 per month for 36 month term.
Guaranteed Best Available Rate Processing Fee $60 plus the franchisee must match the lower Internet rate less 10%.
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 of Travelodge.
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