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How much does Project Q by Hilton cost?
Initial Investment Range
$2,407,290 to $52,176,023
Franchise Fee
$254,775
You will operate a Project Q by Hilton™ (“Project Q”) hotel under a Franchise Agreement with us.
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Project Q by Hilton July 1, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
Low Risk
Explanation
This risk was not identified in the FDD package. Financial statements for Hilton Franchise Holding LLC (Hilton LLC) in Exhibit C show significant assets, revenue, and profitability, with an unqualified audit opinion. A strong financial position suggests the franchisor has the resources to support its obligations and invest in the brand, which is a positive factor for a prospective franchisee.
Potential Mitigations
- It is still advisable for your accountant to conduct a thorough review of the franchisor's financial statements, including all footnotes and the auditor's report.
- Discuss the franchisor's financial health and its implications for the new brand's launch with your business advisor.
- Your attorney can help you understand any financial guarantees or support obligations mentioned in the Franchise Agreement.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified in the FDD package. As "Project Q" is a new franchise system with no operating units, the Item 20 tables show no history of franchisee terminations, non-renewals, or other cessations. For established systems, high turnover can be a significant red flag indicating potential systemic problems, so this is a metric to watch in future FDDs.
Potential Mitigations
- Speaking with franchisees from other mature Hilton brands may provide insight into the company's general relationship and support culture.
- Your business advisor can help you monitor franchisee turnover rates in future FDDs as the system grows.
- An attorney can help you understand your rights and the franchisor's obligations if issues arise in the future.
Rapid System Growth
Medium Risk
Explanation
The franchisor is launching a new brand from a base of zero operating units, with Item 20 projecting nine new franchised hotels in the next fiscal year. While growth is necessary, this represents infinitely rapid initial expansion. Even for a large, experienced company like Hilton, launching a new brand and its support systems presents the risk that franchisee support, quality control, and brand development could be strained.
Potential Mitigations
- In your discussions with the franchisor, inquire specifically about the staffing and infrastructure dedicated to supporting the new "Project Q" brand.
- A business advisor can help you assess whether the franchisor's growth plans are matched by a credible support strategy.
- Consulting with your attorney about the franchisor's specific support commitments in the Franchise Agreement is a prudent step.
New/Unproven Franchise System
High Risk
Explanation
This is a new franchise system, "Project Q by Hilton," with no operating history, as confirmed in Item 20. The brand name itself is temporary and not federally registered. Investing in an unproven concept carries a higher risk, as there are no existing franchisees to consult for brand-specific operational or financial experience, and its market acceptance is unknown. The high initial investment range exacerbates this risk.
Potential Mitigations
- Conducting extensive due diligence on the underlying business concept and its market potential is critical; a business advisor can assist.
- Your attorney should scrutinize the franchisor's obligations and your rights, potentially negotiating more protective terms given the higher risk.
- An accountant should help you develop conservative financial projections, as there is no historical data to rely on.
Possible Fad Business
Medium Risk
Explanation
The "Project Q" brand concept is not clearly defined, and the name itself is disclosed as temporary. This creates a risk that the business could be based on a short-term trend or fad. If consumer interest wanes, the long-term viability of your significant investment could be jeopardized, while your long-term contractual obligations to Hilton LLC would remain.
Potential Mitigations
- A business advisor can help you independently assess the long-term market demand and sustainability for the underlying hotel concept once it is defined.
- It is important to ask the franchisor for their long-term vision and strategy for evolving the brand beyond its initial launch.
- Seeking legal counsel regarding your rights and obligations if the franchisor materially changes the concept after you invest is recommended.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 lists the executive team, which consists of highly experienced, long-tenured professionals from Hilton and the broader hospitality industry. Deep experience in both the specific industry and in managing large-scale franchise systems is a positive factor, suggesting a strong capacity to manage and support the new brand.
Potential Mitigations
- You can still research the specific track record of the key brand leaders with other new brand launches within the Hilton portfolio.
- Discussing the management team's vision for this new brand with a business advisor can provide valuable context.
- It is wise to verify the stability of the management team by asking about any recent departures of key personnel.
Private Equity Ownership
Medium Risk
Explanation
Hilton Worldwide is a publicly traded company (NYSE: HLT) with a history of private equity ownership and continued influence from The Blackstone Group, whose President serves as Hilton's Chairman. Public companies face constant pressure for short-term financial results, which could potentially influence decisions regarding franchisee support levels, fee structures, and long-term brand strategy in ways that may not always align with your individual interests.
Potential Mitigations
- Your business advisor can help you research Hilton's historical relationship with its franchisees across its other brands.
- Inquiring with franchisees of other Hilton brands about their experience with system-wide strategic shifts can be insightful.
- An attorney can help clarify the franchisor's rights to assign the franchise agreement in the event of a future sale or merger.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly discloses the franchisor's parent companies, Hilton Domestic Operating Company Inc. and Hilton Worldwide Holdings Inc. The FDD appears to meet legal requirements for disclosing its corporate structure, providing a clear line of sight into the entities you would be contracting with.
Potential Mitigations
- It is good practice to have your attorney verify the corporate structure and ensure all relevant entities and their roles are understood.
- Your accountant should confirm that the provided financial statements belong to the correct legal entity you are franchising with.
- Understanding the relationship between the franchisor and its parent can be discussed with a business advisor.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 explicitly states that there are no predecessors that offered franchises for the "Project Q by Hilton" brand. As a new system, there is no prior operational history under a different owner to consider, which simplifies due diligence in this specific area but reinforces the risks associated with a new, unproven brand.
Potential Mitigations
- Focus your due diligence on the history and performance of the current franchisor, Hilton LLC, and its management team.
- A business advisor can help you research the performance of other brands that Hilton has launched in the past.
- Your attorney can confirm that there are no undisclosed predecessor liabilities that could affect the new system.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant pattern of litigation. This includes several pending antitrust class-action lawsuits related to room rate-setting software. Furthermore, Hilton recently settled actions brought by the state attorneys general of Texas and Nebraska concerning the disclosure of mandatory guest fees. This history indicates significant legal and regulatory risks associated with the franchisor's business practices.
Potential Mitigations
- A thorough review of the specific allegations and potential ramifications of the pending litigation with your franchise attorney is essential.
- Inquire with the franchisor about the operational changes, if any, made in response to these lawsuits and settlements.
- Your accountant should consider any potential financial liabilities or changes in fee structures that might arise from these legal challenges.
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