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WoodSpring Suites Franchise ProfileLodging & Leisure > Lodging |
What Are the Initial Investment Requirements for a WoodSpring Suites Franchise?
To open a WoodSpring Suites franchise, you will need to prepare for an initial investment ranging from $6,803,600 to $8,739,000. This includes a franchise fee of $50,000, along with ongoing costs such as a 6% royalty fee and a 2.5% marketing fee. Additionally, you'll need to demonstrate a net worth between $500,000 and $1,000,000 and have sufficient cash on hand to cover the initial expenses. Understanding these financial commitments is crucial for aspiring franchisees.
What Is the Financial Performance of WoodSpring Suites?
WoodSpring Suites has shown promising financial performance, with an average annual revenue per unit of approximately $1,537,302. The median annual revenue is slightly lower at $1,434,054, while revenues can range from a low of $704,190 to a high of $2,537,972. Franchisees can expect to break even and recover their investment in about 36 months, making it an appealing option for those looking to enter the hospitality sector.
What Are the Typical Expenses for Running a WoodSpring Suites Franchise?
Running a WoodSpring Suites franchise involves various operational expenses that total around $1,013,947 annually. Key expense categories include administrative and general costs at $263,251, sales and marketing expenses at $203,870, and property operating and maintenance costs at $191,110. Understanding these expenses can help franchisees effectively manage their budgets and optimize profitability.
How Has WoodSpring Suites Expanded Over Recent Years?
WoodSpring Suites has experienced significant growth in recent years, with the number of franchised units increasing from 133 in 2018 to 270 in 2020. The shift from corporate units to a fully franchised model in 2019 indicates a strong commitment to franchise development. This expansion reflects the brand's popularity and the increasing demand for extended-stay accommodations, providing opportunities for new franchisees to join a growing network.
WoodSpring 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:
WoodSpring Suites Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2018 | 2019 | 2020 |
|---|---|---|---|
| Total Units | 225 | 249 | 270 |
| Net Change YoY | 24 | 21 | |
| Franchised Units | 133 | 249 | 270 |
| Net Change YoY | 116 | 21 | |
| Corporate Units | 92 | 0 | 0 |
| Net Change YoY | -92 | 0 |
Investment Overview
The WoodSpring Suites franchise requires a significant initial investment ranging from $6,803,600 to $8,739,000. This includes a franchise fee of $50,000, along with ongoing royalty and marketing fees of 6% and 2.5%, respectively. Potential franchisees must also demonstrate a net worth of between $500,000 and $1,000,000, ensuring they have the financial stability to support the business.
Revenue Potential
On average, each WoodSpring Suites unit generates annual revenue of approximately $1,537,302, with a median revenue of $1,434,054. The revenue range varies significantly, from a low of $704,190 to a high of $2,537,972. This diverse revenue potential indicates that while some locations may struggle, others can achieve substantial success.
Financial Performance
The average gross profit margin for WoodSpring Suites is around 51.77%, indicating a healthy profitability level. After accounting for operating expenses, which average $488,550 annually, the EBITDA stands at approximately $307,796, equating to about 20.03% of revenue. This financial performance showcases the potential for franchisees to achieve a positive return on their investment.
Breakeven Analysis
Franchisees can expect to reach breakeven within approximately 36 months of operation. This timeline is crucial for new investors to understand, as it provides a clear goal for when they can start seeing a return on their initial investment. The investment payback period aligns with the breakeven time, further emphasizing the importance of effective operational management.
Growth Trajectory
WoodSpring Suites has demonstrated consistent growth in franchised units over the years. From 133 franchised units in 2018, the number increased to 270 by 2020. This upward trend highlights the brand's expanding footprint and strong demand in the extended-stay market, presenting a promising opportunity for new franchisees to enter a growing sector.
Corporate Structure
WoodSpring Suites operates under a corporate structure that emphasizes franchise growth and support. While there were 92 corporate-owned units in 2018, the brand has shifted focus entirely to franchising by 2019, indicating a strategic move to empower franchise partners. This structure allows franchisees to benefit from a well-established brand while maintaining operational independence.
Frequently Asked Questions
The initial investment for a WoodSpring Suites franchise ranges from $6,803,600 to $8,739,000. This includes the franchise fee, construction, equipment, and other startup expenses.