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How much does Affordable Suites Of America cost?
Initial Investment Range
$193,100 to $10,168,100
Franchise Fee
$40,000 to $42,500
An Affordable Suites of America™ hotel is an extended-stay hotel offering temporary housing on a weekly or monthly rental basis.
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Affordable Suites Of America May 7, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 22, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor explicitly warns of its financial condition. Audited financials in Item 21 confirm this risk, showing consistent, multi-million dollar net losses for the past three years. The franchisor has very low member's capital and its continued operation depends on cash infusions from its parent company, as noted in the financials. This financial weakness could potentially impact its ability to support you and grow the brand.
Potential Mitigations
- Your accountant must conduct a deep analysis of the franchisor's and the parent company's financial statements, including the terms of the support letter.
- A franchise attorney should assess the legal enforceability of the parent company's support letter and its implications for you.
- Discuss the franchisor's path to profitability and its financial stability with current franchisees and your business advisor.
High Franchisee Turnover
Low Risk
Explanation
High franchisee turnover can signal systemic problems. However, based on the data provided in Item 20 of this FDD, there does not appear to be a high rate of terminations, non-renewals, or other cessations of business. The system has shown steady net growth in franchised units over the last three years with no reported closures, terminations, or franchisor reacquisitions.
Potential Mitigations
- A business advisor can help you analyze the Item 20 tables for any subtle trends, even if turnover seems low.
- Speaking with any former franchisees listed in the FDD is a crucial step your attorney can help you prepare for.
- It is prudent to ask current franchisees about their satisfaction levels and the reasons they believe turnover is low.
Rapid System Growth
Medium Risk
Explanation
The franchisor is growing both the Affordable Suites brand and another brand, stayAPT Suites, simultaneously. This growth, combined with the company's significant financial losses detailed in Item 21, may strain its resources. This could potentially affect the quality and availability of training, operational support, and other assistance you may need, especially as new franchisees are added to two different systems.
Potential Mitigations
- A business advisor should help you question the franchisor about its plans to scale support infrastructure for two growing brands.
- Engage with a range of current franchisees to assess the current quality and responsiveness of franchisor support.
- Your accountant can help analyze if the franchisor's financials show adequate investment in franchisee support services relative to its growth.
New/Unproven Franchise System
High Risk
Explanation
The franchisor explicitly discloses that it has a "Short Operating History" and is at an "early stage of development," making it a potentially riskier investment. The current entity, LG AS Franchisor LLC (ASA), began franchising in 2019 after acquiring the brand from a predecessor. This limited history, combined with its financial condition, means its systems and support structures may be less mature than those of a longer-established franchisor.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the management team’s specific experience in franchising and hospitality.
- It is critical to speak with the earliest franchisees under the current ownership to understand their experience with the evolving system.
- Your attorney can help you assess if the contractual terms offer any additional protections to offset the higher risk of a newer system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The extended-stay hotel concept is a well-established segment within the broader hospitality industry, not a business model based on a fleeting trend. A fad business carries the risk of declining consumer interest, which does not appear to be a primary concern for this type of lodging service.
Potential Mitigations
- A business advisor can help you research the long-term outlook for the extended-stay hotel market in your specific geographic area.
- When creating financial projections, your accountant should consider the resilience of this hotel segment to various economic cycles.
- Your attorney can review the franchise agreement to ensure there are no unusual restrictions that could hinder your ability to adapt to future market changes.
Inexperienced Management
Low Risk
Explanation
This specific risk was not identified. The management team described in Item 2 appears to have significant prior experience in the hospitality and franchise industries. The executives listed have held relevant leadership roles at other major hotel companies, suggesting the franchisor is not managed by a team new to the sector or to franchising.
Potential Mitigations
- You can still perform independent background checks on key executives with the help of a business advisor.
- When speaking with current franchisees, you can inquire about their direct experiences with and perceptions of the management team's competence.
- Your attorney can research if any key personnel have been involved in litigation with other franchise systems.
Private Equity Ownership
High Risk
Explanation
The franchisor is owned by a private equity firm, as disclosed in the notes to the financial statements. This ownership structure may prioritize investor returns, potentially leading to decisions that focus on short-term gains over the long-term health of the system. The Franchise Agreement in section 19.1 also gives the franchisor the right to sell the entire system without your consent, introducing uncertainty about future ownership.
Potential Mitigations
- A business advisor should help you research the private equity firm's track record with other franchise systems it has owned.
- It is important to discuss with current franchisees any changes in fees, support, or strategy since the PE acquisition.
- Your attorney should review the assignment clause (FA § 19.1) to explain the full implications if the brand is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 and the financial statement footnotes clearly disclose the parent company, LG AS Brand Parent LLC. The franchisor also provides a financial support letter from this parent, indicating that its role and backing are part of the disclosure, not hidden from prospective franchisees.
Potential Mitigations
- Your accountant should still thoroughly analyze the financial health of the disclosed parent company, as the franchisor is dependent on it.
- A franchise attorney can review the legal structure to confirm that the entities presented are the key controlling parties.
- Asking the franchisor about the parent company's long-term commitment to the brand is a worthwhile question to pose with your business advisor.
Predecessor History Issues
Low Risk
Explanation
The FDD discloses in Item 1 that the current franchisor acquired the brand's assets from a predecessor in 2019. While no negative litigation or bankruptcy history for this predecessor is disclosed, you are investing in a system managed by a relatively new ownership group. The long-term performance history of the brand was under different management, which adds a layer of uncertainty to the investment.
Potential Mitigations
- A business advisor can help you research the predecessor company to see if any public information reveals past issues.
- If possible, speaking with franchisees who operated under both the old and new ownership could provide valuable insight.
- Your attorney can help you understand any liabilities or operational systems that were inherited from the predecessor.
Pattern of Litigation
Low Risk
Explanation
This risk does not appear to be present. Item 3 of the FDD states that there is no litigation that requires disclosure. This indicates the franchisor has not been recently involved in the types of significant lawsuits with franchisees or regulatory bodies that would suggest systemic problems, a pattern of fraud, or an overly litigious approach.
Potential Mitigations
- Your attorney can still conduct independent public record searches for litigation involving the franchisor or its principals as a final check.
- During discussions with current and former franchisees, it is wise to inquire about any disputes, even if they didn't lead to litigation.
- A business advisor can help you research online forums or news articles for any mention of disputes.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems