Choice Adds Extended -Stay Brand

Choice Hotels International made a smart move in late September with the $10.5-million acquisition of Suburban Franchise Systems, a leading economy extended-stay brand. It made an even-smarter move with the appointment of former Suburban President and CEO Kevin Lewis as vice president, extended brands. In addition to Suburban, Choice also franchises the mid-scale MainStay Suites flag.

The Suburban chain was owned by the brand's franchisees. The purchase price consisted of $8 million in cash and assumption of about $2.5 million in liabilities. An additional $5 million may be paid over the next three years if the brand meets certain development targets.

In other Choice news, the company last month introduced a new fee structure for its budget Rodeway brand. The reduced and streamlined fees are aimed at jump-starting the growth potential of the 150-plus-property flag.

The major change is elimination of a revenue percentage fee structure in favor of a flat fee of $25 per room, per month for the first two years of the contract, followed by annual increases of $1 over the next four years. The initial fee was also reduced to $5,000.

Mutual windows in which franchisees can leave the system have been reduced from five years to one year.

“This new fee structure makes budgeting franchise fees a lot easier, which in turn makes franchising with Rodeway Inn more compelling for developers,” says Ron Burgett, vice president of franchise development. “We created this structure to enhance the brand's growth potential, which seems to be coming to fruition based on strong developer interest so far.”

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