Explanation

Item 20 data does not indicate an unusually high rate of franchisee turnover. In 2024, the system had 519 franchised outlets, with only 4 terminations and 1 unit that ceased operations for other reasons. While any closure is a concern, this rate (less than 1% of the system) does not suggest systemic problems or widespread franchisee failure at this time. However, ongoing monitoring of these trends in future FDDs is prudent.

Potential Mitigations

• Although the numbers are low, it is still advisable to contact some former franchisees listed in Exhibit N to understand their reasons for leaving the system.
• Your business advisor can help you analyze the multi-year trends in Item 20 to identify any developing negative patterns.
• Ask your attorney about any confidentiality agreements noted in Item 20 that may limit what former franchisees can disclose.

Explanation

The franchisor discloses steady, but not excessively rapid, growth. Item 20 shows a net increase of 22 franchised outlets in 2024, on a base of 497. For a large, mature system like Marriott, this level of growth appears manageable and is unlikely to outpace the company's substantial support infrastructure. The risk of support dilution due to overly aggressive expansion seems low given the scale and experience of the parent organization.

Potential Mitigations

• It is still beneficial to discuss the quality and responsiveness of franchisor support with franchisees who have opened in the last 1-2 years.
• A review of the franchisor's assistance capabilities described in Item 11 with your business advisor can confirm they are robust.
• Your accountant can review the financials in Item 21 to confirm that resources are adequate to support current growth levels.

Explanation

The franchisor, MIF, L.L.C., and its parent, Marriott International, Inc., are highly experienced operators with a long history in the lodging industry and franchising. The TownePlace Suites brand has been in operation since 1997 and has over 500 franchised outlets. The system is mature and well-established, not an unproven concept. Therefore, the risks associated with an emerging franchisor or an unproven business model are not present in this FDD package.

Potential Mitigations

• Even with an established brand, consulting a business advisor to review the current market position and competitive landscape for this specific hotel segment is prudent.
• Your attorney can confirm that the experience of the management team listed in Item 2 aligns with the needs of the franchise system.
• Reviewing the system's recent performance data in Item 19 with your accountant can provide insight into its current health.

Explanation

This specific risk was not identified in the FDD Package. The TownePlace Suites brand is an established concept in the extended-stay hotel market, which is a mature segment of the lodging industry. It is not dependent on a short-term trend or fad. However, it is always important to assess the long-term viability of any business model and its ability to adapt to changing consumer preferences and economic conditions.

Potential Mitigations

• A business advisor can help you conduct an independent analysis of the long-term consumer demand for extended-stay hotels in your specific market.
• Evaluate the franchisor's history of innovation and brand evolution with your marketing advisor.
• Discuss the brand's resilience during past economic downturns with existing franchisees to gauge its long-term stability.

Explanation

This specific risk was not identified in the FDD Package. The franchisor entity, MIF, L.L.C., is managed by its parent company, Marriott International, Inc. The directors and principal officers of the parent company, listed in Item 2, possess extensive and long-standing experience in the lodging industry and in managing large-scale franchise systems. There is no indication of a lack of relevant management expertise.

Potential Mitigations

• A business advisor can still help you research the public reputation and recent performance of the key executives listed.
• It is always valuable to ask current franchisees about their direct experiences with the management team's support and strategic direction.
• Your attorney can help verify the professional backgrounds of the leadership team through public sources.

Explanation

This risk is not applicable as the parent company, Marriott International, Inc., is a publicly-traded corporation, not a private equity firm. However, as a franchisee, you are still subject to the decisions of a board and management team that must answer to public shareholders. These interests may not always align perfectly with the interests of an individual franchisee, and a sale of the entire company or the brand is always a possibility.

Potential Mitigations

• Your attorney should review the assignment clause in the Franchise Agreement to understand your rights if the franchise system is sold.
• A financial advisor can help you monitor the parent company's public financial reporting and investor calls for insight into its strategic priorities.
• Discuss with current franchisees how the parent company's status as a public entity has affected the franchise relationship over time.

Explanation

This specific risk was not identified in the FDD Package. Item 1 thoroughly discloses the franchisor, MIF, L.L.C., its parent, Marriott International, Inc., and a vast network of affiliates. The history of the brand and the company is detailed, providing a clear lineage. There is no indication that negative historical information about predecessors has been downplayed or omitted, although comprehensive due diligence is always recommended for such a complex corporate structure.

Potential Mitigations

• It is still wise for your attorney to review the corporate history provided in Item 1 for any potential areas of concern.
• If any predecessors are named, a business advisor can assist in researching their historical performance and reputation.
• Asking long-tenured franchisees about their experience with the brand under any previous ownership structures can provide valuable context.