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Econo Lodge Franchise ProfileLodging & Leisure > Lodging |
What is the Initial Investment for an Econo Lodge Franchise?
To open an Econo Lodge franchise, you should anticipate an initial investment ranging from $161,450 to $901,895. This includes a franchise fee of $30,000. Additionally, you will need to ensure you have cash reserves between $30,000 and $45,595 to cover initial operational costs. The required net worth to qualify as a franchisee falls between $500,000 and $1,000,000, making it essential to evaluate your financial standing before proceeding.
What Are the Ongoing Fees for Econo Lodge Franchisees?
Econo Lodge franchisees are subject to ongoing fees, which include a royalty fee of 5.00% of gross sales and a marketing fee of 3.50%. These fees are critical for maintaining brand standards and supporting national marketing efforts. Understanding these recurring costs will help you plan your budget and assess your profitability over time.
What Are the Revenue Expectations for Econo Lodge Units?
Franchisees can expect average annual revenue per unit to be around $1,848,000, with a median annual revenue of $34,800. The revenue potential varies widely, with the lowest annual revenue recorded at $3,600 and the highest at $144,930. This range highlights the importance of location and operational management in determining your financial success as an Econo Lodge franchisee.
How Long Does It Take to Break Even with an Econo Lodge Franchise?
The breakeven time for an Econo Lodge franchise is estimated at 24 months, with an investment payback period of approximately 28 months. These timelines indicate that while there is potential for profitability, franchisees should be prepared for the initial challenges of establishing their business and managing operational expenses in the early stages.
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 | -43 | -32 | |
| Franchised Units | 777 | 734 | 702 |
| Net Change YoY | -43 | -32 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY | 0 | 0 |
Initial Investment
The Econo Lodge franchise requires a low initial investment ranging from $161,450 to $901,895. This investment includes a franchise fee of $30,000, along with various startup costs that aspiring franchisees should consider when planning their entry into the hospitality industry.
Royalties and Fees
Franchisees are required to pay a royalty fee of 5.00% on gross sales, along with a marketing fee of 3.50%. These fees contribute to the ongoing support and marketing efforts provided by the Econo Lodge brand, ensuring franchisees benefit from collective advertising and brand recognition.
Financial Requirements
Prospective franchisees must meet certain financial criteria, including a cash requirement of $30,000 to $45,595 and a net worth of $500,000 to $1,000,000. These financial benchmarks are designed to ensure that franchisees have the necessary resources to successfully operate an Econo Lodge location.
Revenue Potential
Econo Lodge units generate significant revenue, with an average annual revenue of approximately $1,848,000. However, revenue can vary widely, with the lowest annual revenue reported at $3,600 and the highest at $144,930, reflecting the importance of location and management in financial performance.
Breakeven and Payback Period
Franchisees can expect to reach breakeven within approximately 24 months of operation. The investment payback period is estimated at 28 months, providing a relatively quick return on investment compared to other franchise opportunities in the hospitality sector.
Franchise Growth
The Econo Lodge franchise has seen a gradual decline in the number of franchised units, from 777 in 2020 to 702 in 2022. This trend indicates challenges in the market, but it also presents opportunities for new franchisees to enter a potentially less saturated market and capitalize on brand loyalty and recognition.
Frequently Asked Questions
The initial investment for an Econo Lodge franchise ranges from $161,450 to $901,895, including a franchise fee of $30,000.