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Radisson Individuals
How much does Radisson Individuals cost?
Initial Investment Range
$2,953,250 to $58,847,500
Franchise Fee
$106,500 to $132,500
The franchise offered is for the right to operate a hotel that provides lodging services to the public under the name “Radisson Individuals®”.
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Radisson Individuals April 1, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 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 audited financial statements for Choice Hotels International, Inc. (Choice) in Exhibit C reveal a significant risk. As of year-end 2024, the company reported negative shareholders' equity of over $45 million. While the company is profitable, negative equity can be an indicator of financial vulnerability, potentially affecting its ability to fund growth, support franchisees, and withstand economic downturns. This situation appears driven by substantial stock repurchases, which reduces the company's capital base.
Potential Mitigations
- An experienced franchise accountant should perform a detailed analysis of the franchisor's balance sheet, income statement, and cash flow statement to assess its long-term stability.
- Discuss the specific risks associated with a franchisor having negative equity with your financial advisor.
- Your attorney should investigate whether any financial performance bonds or escrow arrangements are required by state regulators due to this financial condition.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 tables indicates a very high rate of turnover for this new brand. At the start of 2023, there were two franchised outlets in the system. During that year, one of those outlets ceased operations. This represents a 50% failure rate for the system in that year. While the total number of units is very small, such a high percentage of turnover is a significant warning sign about the potential viability or profitability of the franchise for new operators.
Potential Mitigations
- It is critical to contact the former franchisee listed in Item 20 to understand why they left the system; your attorney can help formulate appropriate questions.
- A business advisor can help you assess the systemic risks suggested by this high turnover rate.
- Ask your accountant to factor this high failure rate into your financial projections and risk assessment.
Rapid System Growth
Medium Risk
Explanation
The FDD discloses rapid growth in other Choice brands, but the core issue for you is the franchisor's ability to support this specific new brand. With only one operating franchised hotel, the support systems for Radisson Individuals are likely underdeveloped. The franchisor's resources may be focused on its larger, established brands rather than providing the dedicated, hands-on support a new brand requires to succeed, potentially leaving you with inadequate assistance.
Potential Mitigations
- Question the franchisor directly about the specific team and resources dedicated to supporting the Radisson Individuals brand, separate from their other brands.
- With your business advisor, evaluate whether the franchisor's overall infrastructure can effectively support another new brand.
- Speak with the single existing franchisee to gauge the current quality and responsiveness of the support they receive.
New/Unproven Franchise System
High Risk
Explanation
The Radisson Individuals brand is new to the Choice system, and as of the end of 2024, only one franchised hotel was operational in the U.S. This lack of an established track record presents a significant risk. The business model, brand recognition, and operational support systems are largely unproven in the market under Choice's management. Your investment depends on the success of a concept with a very limited history, which increases the risk of unforeseen challenges and potential failure.
Potential Mitigations
- Performing extensive due diligence on the market demand for this specific 'soft brand' concept is essential; a business advisor can assist.
- Your accountant should help you create conservative financial projections, acknowledging the higher risk of an unproven system.
- Your attorney might be able to negotiate more favorable terms, such as reduced fees or enhanced support commitments, to offset this increased risk.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A 'fad' business is one that enjoys short-term popularity but lacks long-term consumer demand. Investing in such a concept is risky because your long-term franchise agreement could easily outlast the market's interest in the product or service, potentially leading to declining sales and business failure. Assessing the long-term viability of the core business offer is a crucial part of due diligence.
Potential Mitigations
- A business advisor can help you research the industry to determine if the demand for the product or service is sustainable or trend-dependent.
- Evaluating the franchisor's plans for innovation and adaptation to changing market tastes is a key discussion to have with your business advisor.
- Your financial advisor can help you assess the business model's resilience to economic shifts and evolving consumer preferences.
Inexperienced Management
Low Risk
Explanation
This specific risk was not identified. The executives detailed in Item 2 appear to have substantial experience in the hospitality industry, including long tenures at Choice or other major hotel corporations like Hilton and Marriott. However, you should still verify that the specific team members who will directly support your franchise have the relevant experience to assist you effectively. Inexperienced management can be a major risk, leading to poor strategic decisions and inadequate franchisee support.
Potential Mitigations
- Engage a business advisor to help you review the backgrounds of the management team members who will be your primary contacts.
- When interviewing existing franchisees, specifically inquire about their direct experiences with the support team's competence and responsiveness.
- Your attorney can help you formulate questions for the franchisor about the specific experience of the brand support team.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified, as Choice is a publicly traded company, not one owned by a private equity firm. Private equity ownership can introduce risks, as their typical goal is to increase a company's value for a sale within a few years. This can sometimes lead to decisions that favor short-term profitability, such as cutting franchisee support or increasing fees, over the long-term health of the brand. It is a risk worth noting in any franchise evaluation.
Potential Mitigations
- Researching a private equity owner's history with other franchise systems can provide insight into their management style; your business advisor can help.
- Discussing any changes since a PE acquisition with current franchisees is a prudent step.
- An attorney should review the franchise agreement for any terms that might change upon a sale of the franchise system.
Non-Disclosure of Parent Company
Medium Risk
Explanation
This risk is present. Choice Hotels International, Inc. is the parent company, and its financial statements are provided. However, those financials show negative shareholder equity. While the franchisor is a subsidiary of a large, publicly-traded company, its own financial standing is a critical component of risk analysis. The parent company does not provide an explicit guarantee for the franchisor's obligations in the provided documents, so you may be relying on the financial health of the specific entity you are contracting with.
Potential Mitigations
- Your accountant must review the franchisor's financials in Exhibit C to assess its standalone viability.
- It is wise to have your attorney clarify whether the parent company guarantees the franchisor's obligations under the Franchise Agreement.
- A financial advisor can help you understand the potential risks of contracting with a subsidiary that has a weakened balance sheet.
Predecessor History Issues
Medium Risk
Explanation
This risk is present. Item 1 discloses that Choice acquired the Radisson brands from Radisson Hospitality, LLC in 2022, and that the predecessor, Radisson Hotels International, Inc., previously offered franchises. This means the system has a history under different ownership and management. It's important to understand any inherited challenges or changes in philosophy from the predecessor to the current franchisor, as past system performance may not indicate future results under new ownership.
Potential Mitigations
- Your attorney should carefully review the information about the predecessor in Items 1, 3, and 4.
- With your business advisor, you should try to find and speak with franchisees who operated under the predecessor to understand the transition.
- Ask Choice directly about the changes and improvements they have made since acquiring the brand from its predecessor.
Pattern of Litigation
High Risk
Explanation
A significant pattern of litigation is disclosed in Item 3. This includes a class action by approximately 90 franchisees alleging RICO violations, fraud, and anti-competitive practices, and another franchisee suit alleging a fraudulent rebate scheme. Most alarmingly, Choice discloses it lost a recent arbitration where it was ordered to pay a former franchisee over $4.4 million for wrongful termination. This history suggests a highly contentious relationship with franchisees and significant legal risks for you.
Potential Mitigations
- A thorough review of the details of all litigation disclosed in Item 3 with your franchise attorney is absolutely essential.
- This pattern of litigation should be a major topic of discussion when you speak with current and former franchisees.
- Your attorney should advise you on the potential implications of this litigious history for your own franchise relationship.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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