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Red Roof Inn Franchise ProfileRestaurant Franchises > Full-Service Restaurants |
Initial Investment Overview for Red Roof Inn Franchise
To open a Red Roof Inn franchise, you will need to prepare for a significant initial investment ranging from $259,000 to $14,619,155. This includes a franchise fee of $35,000, along with ongoing royalty and marketing fees of 5% and 4%, respectively. It's essential to have cash reserves between $259,000 and $1,596,100, and a net worth of $500,000 to $1,000,000 to meet the financial requirements for franchise ownership.
Financial Performance Insights
Red Roof Inn franchises show promising financial metrics, with average annual revenue per unit reported at $40,000 and a median of $40,490. Some units have even reached annual revenues as high as $14,643,155. The breakeven period is approximately 24 months, with an investment payback time of about 29 months, making it a potentially lucrative opportunity for franchisees who manage their operations effectively.
Understanding Ongoing Costs
Operating a Red Roof Inn franchise comes with various ongoing expenses. Key costs include personnel, sales and marketing, and general administrative expenses, which collectively can amount to significant annual figures. Franchisees should budget for these costs to ensure they maintain profitability while delivering quality service to their guests.
Franchise Growth and Stability
Red Roof Inn has demonstrated consistent growth in its franchise network, increasing from 487 franchised units in 2020 to 541 in 2022. This growth reflects the brand's stability and ongoing demand in the hospitality sector. With a solid foundation and continued expansion, franchisees can benefit from being part of a recognized and reputable brand in the market.
Red Roof Inn 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:
Red Roof Inn 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 | 580 | 588 | 590 |
| Net Change YoY | 8 | 2 | |
| Franchised Units | 487 | 523 | 541 |
| Net Change YoY | 36 | 18 | |
| Corporate Units | 93 | 65 | 51 |
| Net Change YoY | -28 | -14 |
Company Background
Red Roof Inn is a well-established economy hotel chain in the United States, known for its affordable lodging options and pet-friendly policies. Founded in 1973, the brand has grown to over 590 locations across the country, catering primarily to budget-conscious travelers. Red Roof Inn focuses on providing comfortable, clean accommodations, making it a popular choice for families, business travelers, and road trippers alike.
Franchise Opportunity
Investing in a Red Roof Inn franchise offers a unique opportunity to enter the hospitality industry with a recognized brand. The initial investment ranges from $259,000 to $14,619,155, making it accessible for various investors. With a proven business model and ongoing support from the corporate team, franchisees can capitalize on the growing demand for budget-friendly accommodations.
Financial Requirements
To become a Red Roof Inn franchisee, applicants must meet certain financial criteria. A minimum cash requirement of $259,000 to $1,596,100 is necessary, along with a net worth of $500,000 to $1,000,000. The initial franchise fee is set at $35,000, and ongoing royalty and marketing fees are 5% and 4% of gross sales, respectively.
Performance Metrics
Red Roof Inn franchises have shown promising financial performance, with average annual revenue per unit around $40,000. The median revenue is slightly higher at $40,490, showcasing a stable income potential. The breakeven period is typically around 24 months, with an investment payback time of approximately 29 months, making it an attractive option for investors.
Corporate Structure
Red Roof Inn operates under Red Roof Franchising, LLC, which oversees the franchise development and support for its locations. The company has transitioned from a corporate-owned model to a franchise-driven approach, with a significant number of franchised units increasing from 487 in 2020 to 541 in 2022. This shift highlights the brand's commitment to expanding its footprint through franchise partnerships.
Brand Vision
Red Roof Inn aims to provide travelers with quality accommodations at affordable prices while maintaining a commitment to customer satisfaction. The brand's vision encompasses continuous improvement and innovation in service delivery, ensuring that guests enjoy a comfortable experience. By focusing on value and convenience, Red Roof Inn strives to be the go-to choice for budget-conscious travelers across the nation.
Frequently Asked Questions
The initial investment to open a Red Roof Inn franchise ranges from $259,000 to $14,619,155, depending on various factors such as location and size of the property.