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Home2 Suites Franchise ProfileHealthcare & Senior Care > Senior Living Facilities |
What is the Initial Investment for a Home2 Suites Franchise?
To open a Home2 Suites franchise, the initial investment ranges from $14,508,210 to $21,620,632. This includes a franchise fee of $100,000. Prospective franchisees should also prepare for additional costs, such as a cash requirement of $1,000,000 to $1,500,000 and a net worth requirement of $6,165,500. Understanding these financial commitments is crucial for those considering this opportunity.
What are the Ongoing Fees Associated with Home2 Suites?
Franchisees of Home2 Suites are subject to ongoing fees that include a royalty fee of 6% of gross revenue and a marketing fee of 3.50%. These fees are essential for maintaining brand standards and supporting marketing efforts that drive customer traffic. Being aware of these ongoing expenses helps franchisees plan their financial strategies effectively.
What is the Average Revenue Potential for Home2 Suites?
Home2 Suites franchises have demonstrated significant revenue potential, with an average annual revenue per unit reported at $2,245,573. The median annual revenue stands at $1,100,000, while the highest annual revenue can reach up to $10,000,000. This revenue potential is a key factor for aspiring franchisees when evaluating the profitability of their investment.
How Long Does it Take to Break Even with a Home2 Suites Franchise?
Franchisees can expect to reach their breakeven point in approximately 36 months. Additionally, the investment payback period is around 20 months. These timelines are important for financial planning, as they provide insights into how quickly a franchisee can recover their initial investment and begin to see returns. Understanding these metrics can help franchisees set realistic financial goals.
Home2 Suites 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:
Home2 Suites 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 | 377 | 456 | 514 |
| Net Change YoY | 79 | 58 | |
| Franchised Units | 377 | 456 | 514 |
| Net Change YoY | 79 | 58 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY | 0 | 0 |
Investment Overview
Home2 Suites requires a significant financial commitment from franchisees, with initial investments ranging from $14,508,210 to $21,620,632. The franchise fee is set at $100,000, and ongoing royalty and marketing fees are 6% and 3.5%, respectively. To qualify, potential franchisees must have a cash reserve of $1,000,000 to $1,500,000 and a net worth of at least $6,165,500.
Revenue Potential
The average annual revenue per Home2 Suites unit stands at approximately $2,245,573, with a median annual revenue of $1,100,000. Revenue can vary widely, with the lowest reported at $1,200,000 and the highest reaching $10,000,000. This range highlights the potential for profitability in diverse markets.
Franchise Growth
Home2 Suites has demonstrated strong growth in franchised units, increasing from 377 in 2020 to 514 in 2022. This consistent expansion reflects the brand's popularity and the increasing demand for extended-stay accommodations, making it an attractive opportunity for potential franchisees.
Operational Metrics
Franchisees can expect a breakeven period of about 36 months, with an investment payback timeframe of 20 months. These metrics indicate a relatively swift return on investment, making Home2 Suites a compelling option for those looking to enter the hospitality sector.
Average Expenses
Franchisees should be prepared for various operational expenses, including insurance, permits, and miscellaneous pre-opening costs, which can range significantly. Total initial expenses can vary between $14,508,210 and $21,620,632, emphasizing the importance of thorough financial planning before launching a franchise.
Support and Training
Home2 Suites offers comprehensive support and training for franchisees, ensuring they are well-equipped to manage their operations effectively. This includes guidance in areas such as marketing, operational procedures, and customer service, which are crucial for maintaining brand standards and achieving success in the competitive hospitality industry.
Frequently Asked Questions
The initial investment for a Home2 Suites franchise ranges from approximately $14,508,210 to $21,620,632, which includes the franchise fee, equipment, and other startup costs.