Not sure if Spark by Hilton is right for you?
Take our 1-minute franchise matching quiz to get in touch with a Franchise Advisor that can match you with your perfect franchise based on your goals, experience, and investment range.
Take the Quiz & Get MatchedSpark by Hilton
How much does Spark by Hilton cost?
Initial Investment Range
$3,102,531 to $5,514,193
Franchise Fee
$208,895
You will establish and operate a Spark by Hilton™ hotel under a Franchise Agreement with us.
Enjoy our complimentary free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
Spark by Hilton March 30, 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
Low Risk
Explanation
This risk was not identified. The audited financial statements for Hilton Franchise Holding LLC provided in Exhibit C show significant revenues, profitability, and a strong balance sheet. The company appears to have substantial financial resources to support the franchise system and meet its obligations. This financial strength is a positive factor for prospective franchisees.
Potential Mitigations
- An accountant should still review the financial statements, including all notes, to confirm financial health and understand the sources of revenue and profitability.
- A discussion with your business advisor can help contextualize the franchisor's strong financial position within the broader lodging industry.
- Legal counsel should verify if any parent company guarantees are provided and assess their strength, even when the franchisor's own financials are solid.
High Franchisee Turnover
High Risk
Explanation
The Spark by Hilton brand is very new, making historical turnover rates difficult to assess. However, Item 20, Table 3 indicates two franchised outlets 'Ceased Operations for Other Reasons' during 2024. While the absolute number is low, any cessations in the first full year of a brand's major expansion may be a sign of potential issues with the model or franchisee selection, creating a notable risk.
Potential Mitigations
- You should ask the franchisor for a detailed, verifiable explanation for why these two outlets ceased operations.
- A business advisor can help you contact a broad sample of the initial franchisees listed in Exhibit A to discuss their operational experiences.
- It is important that your attorney helps you understand the post-termination obligations you would face if your business were to cease operations.
Rapid System Growth
High Risk
Explanation
Item 20 data reveals extremely rapid growth. The system expanded from 8 to 91 hotels in 2024, with 140 more projected to open in the next fiscal year from 189 signed agreements. Such explosive growth can strain a franchisor's ability to provide adequate site selection guidance, training, and operational support to all new franchisees. This may impact the quality of support you receive during your critical opening phase.
Potential Mitigations
- A discussion with your business advisor should focus on questioning the franchisor about their plans and capacity to scale support services.
- Inquiring with other franchisees who have recently opened can provide insight into the current quality and responsiveness of franchisor support.
- Your accountant can review the franchisor's financials in Item 21 to evaluate if they are allocating sufficient resources to support this growth.
New/Unproven Franchise System
High Risk
Explanation
The FDD states that franchising for the Spark by Hilton brand began in the U.S. in November 2022, with the first hotels opening in 2023. While the parent company, Hilton, is highly experienced, the 'Spark' brand itself is a new and unproven concept in the economy hotel market. Investing in a new system carries higher risks related to unproven operating models, brand recognition, and franchisee profitability.
Potential Mitigations
- A thorough due diligence process, assisted by your business advisor, is critical to evaluate the market viability of this specific new brand concept.
- You should speak with the earliest franchisees listed in Exhibit A to understand their experiences with the new brand.
- Having an attorney attempt to negotiate more favorable terms, such as reduced fees or enhanced protections, could help offset the higher risk.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The franchise operates in the economy hotel segment, a well-established and long-standing sector of the lodging industry. The business model does not appear to be based on a short-term trend or fad, but rather on providing a specific type of accommodation with sustained consumer demand.
Potential Mitigations
- A business advisor can help you assess the long-term stability and competitive landscape of the economy hotel market segment.
- It is still prudent to have your financial advisor help you create business projections that account for potential shifts in travel and lodging trends.
- Your attorney can review the franchise agreement for any flexibility in adapting services to future market changes.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. Item 2 of the FDD details the business experience of the franchisor's key management personnel. The executive team has extensive and long-term experience within Hilton and the broader hospitality industry. This level of experience is a positive factor, suggesting a strong understanding of hotel operations and franchise management.
Potential Mitigations
- A business advisor can still help you research the public track record and reputation of the key executives listed.
- During discussions with existing franchisees, you can inquire about their direct experiences with the management team's leadership and support.
- Legal counsel can help you understand the roles and responsibilities of the key personnel as they relate to the franchisor's obligations to you.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified. Item 1 indicates that the ultimate parent company, Hilton Worldwide Holdings Inc., is a publicly traded company on the New York Stock Exchange (NYSE: HLT). It is not owned by a private equity firm, so the specific risks associated with that ownership model, such as a focus on short-term returns or a quick sale of the company, are not present.
Potential Mitigations
- An accountant can confirm the company's public status and review its public filings (e.g., 10-K reports) for a deeper understanding of its financial health.
- Engaging a business advisor can provide insight into the strategic direction of a publicly traded franchisor versus a privately held one.
- Your attorney should still review the assignment clauses in the franchise agreement to understand the implications of any future sale of the company.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. Item 1 of the FDD clearly discloses the parent companies, Hilton Domestic Operating Company Inc. and Hilton Worldwide Holdings Inc. Furthermore, the FDD includes audited financial statements for the franchisor entity, Hilton Franchise Holding LLC, in Item 21 and Exhibit C. There is no indication of a failure to disclose a relevant parent or their financials.
Potential Mitigations
- An experienced franchise accountant should review the provided financials to ensure they are complete and prepared according to GAAP.
- Your attorney can help you understand the corporate structure and the legal relationship between the franchisor and its parent companies.
- It is useful to ask the franchisor to clarify the extent to which the parent company guarantees the franchisor's obligations.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified. The Spark by Hilton brand is a new franchise system created by the franchisor. According to Item 1, there are no predecessors from which the franchisor acquired the brand or its assets. Therefore, there are no inherited issues or negative history from a prior entity to consider.
Potential Mitigations
- Your attorney should confirm the brand's origin as detailed in Item 1 of the FDD.
- A discussion with a business advisor can help you understand the unique risks and opportunities of investing in a new brand versus an established one.
- It's still beneficial to ask early-adopter franchisees about their experiences with the franchisor's launch and initial support.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses that the franchisor's parent, Hilton Worldwide, is a defendant in several pending class action antitrust lawsuits. These suits allege that Hilton and other major hotel companies improperly shared data to inflate room rates using revenue management software. While not claims of fraud by franchisees, this pattern of significant, systemic litigation could pose reputational risks to the brand and indicates potential legal challenges for the entire system.
Potential Mitigations
- A franchise attorney must review the details of the pending antitrust litigation and explain the potential implications for the Hilton system.
- Engaging a business advisor to research public information and news reports about these lawsuits can provide additional context.
- You should ask the franchisor directly about these lawsuits and how they might affect franchisees' use of required revenue management systems.
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
Unlock Full Risk Analysis
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
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
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
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
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
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
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
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