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How Much Does It Cost to Open Motel 6 Franchise?

Do you want to open a lodging & accommodation business by buying Motel 6 franchise? If YES, here is how much it cost to open Motel 6 franchise successfully. If you are looking towards opening a Motel 6 Franchise, it will be nice for you to have a preview of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location.

Motel 6 was founded in 1962 and they began franchising in 1996, about 24 years ago. The current CEO is Rob Palleschi and they have their corporate head office at 4001 International Pkwy. Carrollton, TX 75007, USA. As of 2018, the company owns and operates 882 franchises in the United States and 26 outside the country. Based on 2016 FDD data, Motel 6 has franchise locations in 48 states plus DC. The largest region is the South with 467 franchise locations.

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Motel 6 is an American privately owned hospitality company with a chain of budget motels in the United States and Canada. The first Motel 6 opened in Santa Barbara, California, in 1962, and got its name from its initial room rates: $6 a night. Fifty-five years later, Motel 6 is managed by G6 Hospitality and has a network of more than 1,300 economy lodging locations across the U.S. and Canada.

Here are areas where you are expected to spend money and the cost associated with it;

Financial Investment Required to Open a Motel 6 Franchise?

1. Initial Investment Range: $2,617,700 – $3,868,600

2. Franchise Fee: $35,000

3. Royalty Fee: 6 percent of Gross Sales

And the Due Date for this fee is Paid by electronic funds transfer every Friday for the preceding Reporting Period. The amount of the Royalty Fee for any renewal term will be that provided in the Franchise Agreement executed for such renewal term.

Please note that “Gross Revenues” include all revenues generated from the provision of any and all services and/or the sale of any and all products and, whether by the franchisee or a third-party provider, that relate to or arise from the Franchised Business. It does not include taxes collected from customers.

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4. Local Advertising Spend, Local Marketing Fund, or Cooperative Advertising Contribution

At least 1 percent per calendar year and the Due Date: for this is Monthly. Please note that each local advertising Cooperative may elect to increase the monthly contribution if approved by a two-thirds majority of the members, and the minimum contribution is subject to adjustment by an amount not to exceed the increase in the CPI.

Centers owned by Motel 6 and its affiliates are also members of their respective local Cooperative and each company-owned Center has the same voting rights as the franchised locations within the Cooperative.

If the company-owned Centers comprise the majority of a given Cooperative, the maximum and minimum fees for that Cooperative will be consistent with the range stated in this Item 6.

  1. Liquidated Damages Under Area Development Agreement: This fee varies but the Due Date is Payable within 30 days of the termination of the Development Agreement.
  2. Audit Costs: All costs and expenses associated with the audit, reasonable accounting and legal costs.
  3. Indemnity: This fee will vary under the circumstances and the Due Date is As incurred.
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Please note that you must reimburse Motel 6 if it is held liable for claims arising out of your franchise operations.

  1. Insurance: Reimbursement of costs the franchisor’s out-of-pocket costs.
  2. Equipment, Supply, or Supplier Testing or Inspecting: Fee not to exceed the actual costs of inspecting and testing. (Due Date:  Due on receipt of invoice.)

Please note that This fee covers the cost of testing or inspecting equipment, supplies, or suppliers you propose.

  1. POS Hardware and Software: Depends upon vendor and products purchased. (Due Date:  Depends upon vendor and products purchased.)
  2. Attorneys’ Fees and Costs: Will vary under circumstances. (Due Date:  As incurred.)
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Payable to Motel 6 if it is forced to retain independent counsel and seek damages or injunctive relief to enforce the Franchise Agreement (whether or not suit is filed) or if Motel 6 is required to defend your unsuccessful claim against it.

  1. Veteran Incentives: $1,500 for training fee
  2. Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If requirements are met, franchisees can renew for one additional term of 10 years.
  3. Financial Assistance: Motel 6 has relationships with third-party sources which offer financing to cover the following: franchise fee, startup costs, equipment, inventory, accounts receivable, and payroll et al.
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In Summary,

  • Initial Franchise Fee: $25,000 – $35,000
  • Total Investment: $2,389,600 to $3,454,000
  • Working Capital: $55,000 to $70,000
  • Ongoing Royalty Fee: 5%
  • Ad Royalty Fee: 3.5%