Red Roof Inn franchise cost
Red Roof Inn charges a royalty of 5% of gross room revenue plus a further 4% in marketing, reservation or system fees, according to its franchise disclosure document issued April 9, 2026. The franchisor estimates the total cost of a new-build hotel at $7,253,500 to $8,899,600, not counting land; converting an existing hotel runs $264,850 to $1,596,100.
- Royalty
- 5%of gross room revenue
- Marketing
- 4%of gross rooms revenue
- Fee to take over on a purchase
- None statedItem 5 lists no separate transfer fee. Ask Red Roof what it charges on a change of ownership.
- Fee for a new franchise
- $27,000Item 5 formula at 60 rooms. Fees actually charged can be lower; see the notes below.
- Total investment
- $7.25M to $8.90MItem 7 estimate for a new-build hotel
Recurring fees in the 2026 FDD
| Royalty | 5% of Gross Room Revenues |
|---|---|
| Marketing or brand fund | Marketing and Reservation Fee (combined): 4.0% of gross room revenue; cap: maximum 5% |
| Reservation, loyalty and technology | Marketing and Reservation Fee 4% of Gross Room Revenues covers reservation system and marketing; RediRewards Preferred Member Program 4% of Gross Room Revenues from RediRewards Preferred Members (max 5%); GDS booking $6.60-$7.00, third-party internet $3.30-$3.60, direct connect $1.99-$2.25 per booking; mobile app $1.75 per net booking; commissions 0%-25%. |
| Initial fee (Item 5) | $27,000 for hotels with up to 100 guest rooms. You must pay an additional $300 for each additional guest room; for hotels with up to 100 guest rooms, plus $300 per additional room; Fees 'subject to negotiation'; in 2025 initial franchise fees ranged from $12,000 to $27,000. Women/Veteran-owned Development Incentive Program reduces initial franchise fee by $10,000. |
| New build (Item 7) | $7,253,500 to $8,899,600 |
| Conversion (Item 7) | $264,850 to $1,596,100 |
| What Item 7 assumes | Red Roof Inn / Inn & Suites: Item 7 Table 1 new build 82 rooms; conversion 65 rooms. Other tables: Red Roof PLUS+ new $7,267,500-$8,923,100 / conversion $353,000-$1,659,100; PLUS+ & Suites new $7,267,500-$8,293,100 (as printed) / conversion $357,000-$1,695,600; Dual Brand RRI+HomeTowne Studios new 140 rooms $13,569,518-$15,836,090, conversion 120 rooms $693,268-$2,284,813. Excludes land. |
From the filing: Royalty incentive: 'we may provide a financial incentive to you of up to 0.5% of your Gross Room Revenues for a 12-month period' for meeting guest-satisfaction standards (discretionary). Franchise Referral Credit $5,000 or 0.25-pt royalty reduction for up to one year.
What the fees cost a 60-room hotel
Take a 60-room Red Roof Inn with $1,500,000 of rooms revenue a year. The royalty and the marketing or system fees that apply to every room night come to 9%, or $135,000 a year. That is $135,000 a year, about $11,250 a month, before payroll or utilities. Fees charged only on some bookings, such as loyalty-member stays, central reservation bookings and online commissions, come on top.
Those fees come straight off NOI. At 1.25x coverage, $135,000 of fees is $108,000 a year of payment you can no longer borrow against, or about $990,000 of loan at 10% over 25 years.
Fees billed per reservation, per transaction or as a fixed amount are not in this total; they are listed in the table above as the FDD states them. Run your own numbers with Red Roof Inn fees filled in.
Financing a Red Roof Inn
Lenders read the franchise agreement as closely as the appraisal. On a purchase, expect the brand to require a change-of-ownership application, a new franchise agreement on current terms and often a property improvement plan (PIP), and expect the lender to fold the PIP cost into the project. For a new build, the Item 7 range is the starting point for the construction budget a lender will test.
Most owner-operators finance a branded hotel with an SBA 7(a) or 504 loan. Read SBA 7(a) for hotels and SBA 504 for hotels, or send the deal to Janover Capital.
Source
Red Roof Inn Franchise Disclosure Document, issued April 9, 2026, as filed with the Minnesota Department of Commerce (CARDS). Cover; Item 5 FDD pp.8-10 (PDF pp.15-17); Item 6 FDD p.10 (PDF p.17); Item 7 FDD p.19+ (PDF p.26+). View the filing record. Fees change every year and the franchise agreement you sign controls. Read on 2026-10-24.
Other Red Roof brands
- HomeTowne Studios: royalty 5.5%, all percent fees 8.5%
Buying or building a Red Roof Inn?
Send the deal to Janover Capital, which runs this site and arranges hotel financing through lenders.