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Homewood Suites Franchise ProfileRestaurant Franchises > Full-Service Restaurants |
What Are the Initial Investment Requirements for a Homewood Suites Franchise?
To open a Homewood Suites franchise, the initial investment ranges from $20,276,671 to $30,054,220. This includes a franchise fee of $75,000. Potential franchisees should also be prepared for ongoing expenses such as a 3.5% royalty fee and a 3.5% marketing fee. Additionally, a net worth of at least $6,165,500 is required, along with sufficient cash reserves to cover the initial costs.
What Are the Financial Performance Metrics for Homewood Suites?
Homewood Suites franchises have shown promising financial performance, with an average annual revenue of $1,771,173 per unit. The median revenue can reach up to $6,000,000, while some units report revenues as high as $10,000,000. Franchisees can expect a breakeven period of approximately 24 months, with an investment payback period of around 33 months, making it a potentially lucrative opportunity for investors.
What Are the Operational Costs Involved in Running a Homewood Suites Franchise?
Operating a Homewood Suites franchise involves various costs, including rent, utilities, marketing, and salaries for management and administrative staff. While the specific amounts can vary widely, franchisees should anticipate these ongoing expenses as part of their financial planning. Understanding these costs is crucial for maintaining profitability and ensuring the smooth operation of the franchise.
Is a Homewood Suites Franchise a Good Investment Opportunity?
Investing in a Homewood Suites franchise can be appealing due to its strong revenue potential and established brand presence in the hospitality sector. With a solid track record of growth—evidenced by the increase in franchised units from 458 in 2019 to 490 in 2021—this franchise offers a well-supported business model. Franchisees benefit from ongoing training and support, which can be particularly advantageous for those new to the hospitality industry.
Homewood 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:
Homewood Suites Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2019 | 2020 | 2021 |
|---|---|---|---|
| Total Units | 458 | 480 | 490 |
| Net Change YoY | 22 | 10 | |
| Franchised Units | 458 | 480 | 486 |
| Net Change YoY | 22 | 6 | |
| Corporate Units | 0 | 0 | 4 |
| Net Change YoY | 4 |
Initial Investment
The Homewood Suites franchise requires a significant initial investment, ranging from $20,276,671 to $30,054,220. This includes a franchise fee of $75,000. Potential franchisees should be prepared for these financial commitments as they embark on their journey in the hospitality industry.
Royalty and Marketing Fees
Franchisees are subject to a royalty fee of 3.5% of gross sales, along with a marketing fee of 3.5%. These fees contribute to the ongoing support and brand promotion provided by Homewood Suites, ensuring a consistent and effective marketing strategy across all locations.
Financial Performance
Homewood Suites units generate impressive average annual revenues, with figures reaching up to $1,771,173. The median annual revenue per unit is $6,000,000, showcasing the brand's strong market presence and profitability potential for franchisees.
Breakeven and Payback Period
Franchisees can expect to reach breakeven within approximately 24 months of operation. The investment payback period is around 33 months, providing a relatively quick return on investment compared to other franchise opportunities in the hospitality sector.
Franchised and Corporate Units
As of 2021, Homewood Suites has a total of 490 units, with 486 being franchised and 4 corporate-owned. This growth trajectory indicates a robust franchise model and a commitment to expanding the brand's footprint in the hospitality market.
Operational Expenses
While specific annual expenses vary, franchisees should consider costs related to rent, utilities, marketing, salaries, insurance, and miscellaneous operating expenses. These factors are essential for maintaining efficient operations and maximizing profitability within the Homewood Suites framework.
Frequently Asked Questions
The initial investment for a Homewood Suites franchise ranges from approximately $20,276,671 to $30,054,220, which includes the franchise fee and other startup costs.