Motel 6 Franchise in 2024: Costs, Fee & FDD
Looking to invest in the franchise budget lodging sector? Motel 6, with over 1,400 locations, offers affordable accommodations and a strong support system for franchisees. Dive into the details now!
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Motel 6 is a well-known name in the U.S. lodging industry, rooted in its humble beginnings on the California coast. Founded in 1962 by William Becker and Paul Greene, two contractors who recognized the need for budget-friendly accommodations, Motel 6 opened its first 52-room motel in Santa Barbara. At just $6 a night, their idea of providing clean, affordable lodging quickly caught on, giving rise to what would become an iconic brand in the economy hotel segment. This low-cost approach still defines the brand today, offering simple comfort to travelers without breaking the bank.
Motel 6’s core offering revolves around affordable, no-frills accommodations. Guests can expect clean rooms with basic amenities such as free Wi-Fi and pet-friendly policies, catering primarily to budget-conscious travelers, families, and road-trippers. Over the years, Motel 6 has added ancillary services like extended-stay options through its Studio 6 brand, targeting both short-term and long-term stays. This adaptability ensures the franchise remains a staple for travelers seeking value across various markets.
Today, Motel 6 boasts an impressive scale, with over 1,400 locations across the U.S. and Canada. It serves millions of guests each year, thanks to its widespread presence and brand recognition. The company has successfully captured a broad demographic, from vacationers and business travelers to those looking for extended stays. The brand’s scope, rooted in consistency and affordability, has made it a dominant player in the budget lodging space, attracting repeat customers seeking reliable, cost-effective options.
Franchisees benefit from ongoing training programs covering operations, marketing, and customer service, ensuring they can deliver a consistent guest experience. Motel 6 also provides marketing support, brand recognition, and a centralized reservation system, making it easier for franchisees to attract and retain guests. The combination of solid brand equity and strong support positions Motel 6 as an appealing investment in the economy lodging sector.
Motel 6 Franchise Insights
- Motel 6 has been a cornerstone of the budget lodging industry since 1962, with over 1,400 locations across the U.S. and Canada, making it one of the most recognized economy motel brands in North America.
- Motel 6 serves millions of travelers annually, benefiting from its pet-friendly policies and affordable nightly rates, keeping occupancy rates consistent across its locations.
- Its sister brand, Studio 6, taps into the growing demand for extended-stay accommodations, expanding revenue opportunities for franchisees in long-term lodging markets.
Motel 6 Franchise Key indicators
Growth YOY (%)
1%
vs industry 2%
Total U.S. Franchised Units
1,208
3-Year Failure Rate
10%
vs industry 6%
How much does it cost to open a Motel 6 franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Motel 6 franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Motel 6 franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Motel 6 below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Market Feasibility Study | $0 | $15,000 |
| Property Ownership or Acquisition Costs | Variable | Variable |
| Initial Fees Paid to Us | $41,300 | $41,300 |
| Opening Extension Fee | Variable | Variable |
| Ancillary Trip Fee | Variable | Variable |
| Architectural, Design Fees | $120,000 | $270,000 |
| Site and/or Civil Work | $80,000 | $250,000 |
| Construction Expenses | $5,039,047 | $6,298,809 |
| Construction Contingency | $251,952 | $314,940 |
| Furniture, Fixtures, & Equipment (FF&E) | $463,086 | $555,703 |
| FF&E Contingency | $23,154 | $27,785 |
| Signage | $21,725 | $60,500 |
| WIFI Infrastructure | $5,500 | $10,000 |
| Telephone System | $1,500 | $10,000 |
| PMS and Credit Card Processing Equipment | $4,000 | $5,000 |
| Opening Inventory & Supplies | $100,000 | $190,000 |
| Insurance | Variable | Variable |
| Utility Deposits | Variable | Variable |
| Grand Opening Expense | $0 | $5,000 |
| Additional Funds for Initial Phase (3 months of operations) | $100,000 | $160,000 |
| TOTAL (excluding land acquisition costs) | $6,251,265 | $8,238,350 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
When considering opening a Motel 6 or a similar economy lodging franchise, several financial requirements are essential to evaluate. Here’s a breakdown of the necessary capital, liquid assets, and net worth typically needed:
- Initial Investment For Motel 6, the total investment for a new construction typically ranges from $6.25 million to $8.24 million, while renovating an existing motel would likely involve a lower investment depending on the scope of the renovations. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Requirement For most hotel and motel franchises, liquid cash requirements generally range from $500,000 to $1 million, ensuring that the franchisee has enough available capital to cover operational expenses and startup costs.
- Net Worth Requirement Franchisees typically need a net worth of around $3 million to $5 million, including both liquid assets and other investments, to meet the financial requirements and secure financing.
How much does a Motel 6 franchise owner make?
Calculating the salary of a Motel 6 franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Motel 6 franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Motel 6 Revenue & Gross Sales
While specific median gross sales figures for Motel 6 franchises aren’t publicly available, we can offer a general overview of performance based on industry trends and the brand’s positioning.
Motel 6 operates in the economy lodging sector, which tends to have consistent occupancy rates due to its affordability and wide customer base. Franchisees can expect steady revenue from a mix of short-term stays, road travelers, and long-term guests via Studio 6’s extended-stay model. Performance can vary significantly depending on location, with high-traffic areas like interstate highways or major cities typically seeing higher occupancy and revenue. As an economy brand, Motel 6 focuses on high occupancy rather than high room rates, aiming for consistent, volume-driven returns.
Which key factors impact the average revenue performance of Motel 6 franchisees?
The performance of U.S. Motel 6 franchisee median gross sales is likely influenced by several key factors. Location plays a significant role, with properties near major highways, airports, or tourist destinations typically experiencing higher occupancy rates. The brand’s affordability appeals to a broad customer base, including budget-conscious travelers and extended-stay guests, contributing to steady demand. Motel 6’s recognizable brand and wide-reaching marketing efforts drive customer loyalty, while its pet-friendly policies and no-frills approach further enhance its appeal. Additionally, efficient operational models and the focus on high occupancy rather than luxury allow franchisees to maintain lower operational costs, positively impacting profitability.
Motel 6 Franchise Operational Costs
When opening a Motel 6 franchise, understanding the key primary ongoing operational costs is essential to managing profitability. These expenses are critical to maintaining day-to-day operations and ensuring a positive guest experience. Here are some key costs to keep in mind:
- Staffing and Payroll Employee wages, benefits, and training costs will be a major ongoing expense, especially for positions like front desk personnel, housekeeping, and maintenance staff.
- Utilities Electricity, water, heating, and cooling are significant costs in hotel operations, especially given the need for climate control and continuous lighting.
- Maintenance and Repairs Regular upkeep of guest rooms, common areas, and building systems, such as plumbing and HVAC, will require consistent investment to keep the property in good condition.
- Cleaning and Supplies This includes the cost of laundry services, linens, toiletries, cleaning products, and guest amenities to maintain cleanliness and comfort.
- Property Management Systems and Technology Investing in property management software, reservation systems, and security features is critical for efficient operations and guest satisfaction.
Effectively managing these operational costs will be key to maintaining profitability and ensuring that your Motel 6 franchise runs smoothly.
Motel 6 Franchise Fees
When opening a Motel 6 franchise, it’s important to understand the various fees that contribute to the ongoing support and success of the business. These fees are structured to help maintain brand consistency, marketing efforts, and operational efficiency across the Motel 6 network. Here’s a breakdown of the primary fees you should consider:
- Royalty Fee Set at 5% of gross room revenues, this fee is paid monthly and helps fund the ongoing support and development of the Motel 6 brand. It covers essential services like operational assistance, brand consistency, and overall franchise support.
- Program Fee Currently at 3% of gross room revenues, this fee supports the Motel 6 marketing program, which includes brand promotion, advertising campaigns, and the development of support systems. It also covers enhancements to technology and operational tools aimed at improving franchisee performance.
- Reservation Fee At 1% of gross room revenues, this fee contributes to the development and operation of the Motel 6 reservation system. This centralized system ensures seamless guest booking experiences across all franchise locations, driving more traffic to your property.
- Additional Fees Motel 6 may charge additional fees for training programs, technology upgrades, or specific operational items that are essential to keeping the franchise competitive.
By understanding these fees and their benefits, franchisees can see how Motel 6 supports their success while maintaining a strong and cohesive brand presence across all locations.
Motel 6 Franchise Earnings
While specific earnings data for Motel 6 franchises is not available, we can provide an informed overview based on industry standards and the characteristics of the brand. Motel 6 operates within the economy lodging segment, which tends to generate revenue through high occupancy rates rather than high room rates. This model, combined with Motel 6’s strong brand recognition and wide customer base, allows franchisees to benefit from consistent demand, particularly in high-traffic areas. Locations near highways, airports, and tourist destinations typically see better performance, as the brand caters to budget-conscious travelers and those seeking short-term or extended stays.
Franchisees can also potentially boost their earnings through cost-efficient operations. Motel 6’s straightforward service offerings—focusing on cleanliness, convenience, and affordability—help keep operational expenses relatively low. Additionally, the support provided by Motel 6, such as marketing and a centralized reservation system, can help drive more bookings, leading to higher revenue potential. Ultimately, profitability depends on factors like location, operational efficiency, and how well the property is managed to maximize occupancy and control costs.
How to Open a Motel 6 Franchise
Becoming a Motel 6 franchisee involves a clear, step-by-step process designed to guide prospective owners from initial inquiry to the start of operations. Here’s a breakdown of the key steps involved, helping you navigate the path to opening your franchise:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Franchise Application Once you’ve connected with the team, you will complete an official application. This step involves a detailed review of your financials, including net worth and liquid assets, to ensure you meet the franchise’s financial requirements.
- Due Diligence and Review During this period, you’ll thoroughly review the FDD, seek legal or financial advice, and conduct further research. You’ll also meet with Motel 6 representatives to discuss the brand and ask any questions about the franchise model.
- Franchise Agreement Signing Once both parties are ready, you’ll sign the franchise agreement, officially becoming a Motel 6 franchisee. At this point, you’ll also pay the initial fees required for the franchise.
- Site Selection and Approval You’ll work with Motel 6 to select a location for your franchise, whether it’s a new build or an existing property. The brand will provide assistance in evaluating the suitability of the site based on traffic, demographics, and market potential.
- Training Program Motel 6 offers a comprehensive training program that covers everything from operations and guest services to marketing and property management. This training ensures you and your staff are well-prepared to run the franchise successfully.
- Pre-Opening Preparation Leading up to the grand opening, Motel 6 will guide you through setting up the property, installing systems, and ensuring compliance with brand standards. Marketing and promotional efforts will also be launched to generate buzz.
- Opening and Operations Finally, once everything is set up and approved, your Motel 6 location will officially open for business. From here, you’ll begin daily operations with ongoing support from the Motel 6 franchise team to ensure success.
Pros & Cons
Pros
Strong Brand Recognition: Motel 6 is a well-established brand with over 60 years of experience, offering instant credibility and trust among travelers, especially in the economy lodging sector.
Consistent Demand: The brand caters to budget-conscious travelers and extended-stay guests, ensuring steady occupancy across a wide demographic, including business travelers, families, and tourists.
High Occupancy, Low Overhead: Motel 6 focuses on high occupancy and lean operational costs, allowing franchisees to manage expenses effectively while maintaining a steady revenue stream.
Centralized Reservation System: With Motel 6’s reservation system, franchisees benefit from a streamlined booking process that draws guests from various channels, increasing occupancy.
Cons
High Initial Investment: The cost to build or renovate a Motel 6 property can be significant, particularly for new construction, which may require careful financial planning and a long-term commitment.
Economy Sector Challenges: While the economy lodging model generates consistent demand, it relies on high volume rather than high rates, which may result in thinner margins compared to midscale or upscale brands.
Location-Dependent Performance: Earnings and occupancy rates can vary greatly depending on the property’s location. Areas with low traffic or limited tourist appeal may experience slower growth.
