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Econo Lodge Franchise ProfileLodging & Leisure > Lodging |
How to Open an Econo Lodge Franchise?
To begin your journey toward owning an Econo Lodge franchise, you typically start by submitting an inquiry to Choice Hotels, the parent company. If you meet the initial qualifications, you will engage in a series of discussions with franchise development representatives to review the brand's standards and expectations. Given that Econo Lodge is a well-established economy brand, you will need to prepare for an initial investment ranging from $161,450 to $1,047,895, which includes a $35,000 franchise fee. Once your application is approved and the franchise agreement is signed, you will receive support in site selection or conversion, followed by comprehensive training to ensure your hotel meets the brand's service and operational requirements.
What Might Make an Econo Lodge Franchise a Good Choice?
Econo Lodge is a recognized name in the budget hotel sector, offering a straightforward business model focused on providing essential amenities for travelers. The brand requires a liquid cash injection of at least $80,000 and a net worth ranging from $1,000,000 to $10,000,000, depending on the scale of the project. With a median annual revenue per unit reported between $1,000,000 and $10,000,000, the brand presents a significant opportunity for revenue generation. Additionally, the data indicates a relatively quick breakeven time of approximately 8 months, which may appeal to investors looking for faster operational stabilization compared to higher-end lodging tiers.
Why You May Want to Start an Econo Lodge Franchise?
Starting an Econo Lodge franchise allows you to tap into the massive reservation system and marketing power of Choice Hotels. Franchisees benefit from a structured support system and a 3.00% marketing fee that fuels national brand awareness. While the brand has seen a slight contraction in unit count-moving from 777 franchised units in 2020 to 702 in 2022-it remains a staple of the American roadside. The 5.0% royalty fee is competitive for the industry, and the lack of corporate-owned units means the company is fully focused on supporting its franchise partners rather than competing with them. If you are interested in a high-volume, economy-scale lodging business, this model is designed for efficiency and ease of operation.
Is Owning an Econo Lodge Franchise the Right Move for You?
Deciding to invest in an Econo Lodge requires a balance of financial readiness and a commitment to the hospitality industry. While the highest annual revenue per unit has reached $757,576 and the lowest reported was $748,012, potential owners should note the investment payback period is estimated at 86 months. You must be prepared to manage the ongoing costs of a 24/7 service business while maintaining the brand standards that value-conscious travelers expect. If you have the required net worth and are looking for a brand with a proven track record and a clear path to operational breakeven, Econo Lodge could be the right addition to your investment portfolio.
Econo Lodge Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Econo Lodge Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2020 | 2021 | 2022 |
|---|---|---|---|
| Total Units | 777 | 734 | 702 |
| Net Change YoY | N/A | -43 | -32 |
| Franchised Units | 777 | 734 | 702 |
| Net Change YoY | N/A | -43 | -32 |
| Corporate Units | N/A | 0 | 0 |
| Net Change YoY | N/A | N/A | 0 |
Investment Requirements
Starting an Econo Lodge franchise requires an initial investment ranging from a low of $161,450 to a high of $1,047,895. Prospective franchisees must demonstrate financial stability with a required net worth between $1,000,000 and $10,000,000, and must have at least $80,000 in liquid cash available to begin operations.
Franchise Fees and Royalties
To join the Econo Lodge brand, franchisees must pay an initial franchise fee of $35,000. Ongoing operational costs include a royalty fee of 5.0% of gross sales for new units. Additionally, franchisees contribute to the brand's visibility through a marketing fee set at 3.00% of revenue.
Financial Performance
The Econo Lodge system shows a wide range of performance across its locations. The median annual revenue per unit is reported between $1,000,000 and $10,000,000, while the lowest recorded annual revenue stands at $748,012. On average, units generate approximately $80,000 in annual revenue, with top-performing units reaching up to $757,576.
Return on Investment
For new franchise owners, the path to profitability is clearly defined by historical data. The typical breakeven time for an Econo Lodge unit is approximately 8 months. Looking at long-term recovery of the initial capital, the investment payback period is estimated at 86 months.
Unit Growth and Network
Econo Lodge maintains a significant presence in the hospitality industry, though the total number of franchised units has seen a slight contraction recently. The network consisted of 777 units in 2020, 734 in 2021, and 702 in 2022. Notably, the brand operates entirely through franchised locations, as there have been zero corporate-owned units reported from 2021 through 2023.
Brand Opportunity
Econo Lodge offers a well-recognized name in the economy lodging sector, providing a streamlined business model for hotel operators. With a focus on providing essential amenities at a budget-friendly price point, the franchise allows owners to tap into a large market of value-conscious travelers while benefiting from the support of an established hospitality network.
Frequently Asked Questions
The total initial investment for an Econo Lodge ranges from a low of $161,450 to a high of $1,047,895. This range covers various startup costs, including the initial franchise fee and property improvements.