Franchise costs for Choice Hotels typically include a mix of upfront fees, development expenses, and ongoing royalties. The main cost drivers are site selection, construction or conversion, FF&E, and ongoing marketing and royalty fees. This guide presents cost ranges in USD with practical estimates to help prospective franchisees budget accurately.
| Item | Low | Average | High | Notes |
|---|---|---|---|---|
| Initial Franchise Fee | $15,000 | $31,000 | $42,000 | One-time paid to Choice Hotels upon signing |
| Development/Conv. Costs (per room) | $90,000 | $130,000 | $180,000 | Includes permits, site work, civil, and interior build-out |
| FF&E (per room) | $25,000 | $40,000 | $60,000 | Furnishings, fixtures, equipment |
| Construction/Build-Out (per room) | $110,000 | $180,000 | $260,000 | Depends on brand subset and market |
| Grand Opening/Pre-Opening Costs | $10,000 | $25,000 | $40,000 | Marketing, staff training, launch events |
| Working Capital | $25,000 | $60,000 | $100,000 | 2–6 months operating reserve |
| Ongoing Royalty (of gross rooms revenue) | 5% | 5.5% | 6% | Paid monthly |
| Brand/Marketing Fee | 0% | 1.5% | 2% | Allocated for nationwide campaigns |
| Required Insurance & Permits | $5,000 | $15,000 | $25,000 | Annualized where applicable |
| Estimated Total Startup (per property, 100 rooms) | $1,270,000 | $2,000,000 | $2,900,000 | Assumes mid-market location and standard design |
Assumptions: region, brand subset, size, and scope of build-out.
Overview Of Costs
Range guidance combines upfront and ongoing obligations. For a typical 100-room property in a mid-market area, total initial investment commonly falls in the $1.3–2.9 million band, with per-room build-out around $180,000–$260,000 depending on site conditions.
Per-unit context aligns with per-room planning: build-out often ranges $110,000–$260,000 per room, FF&E $25,000–$60,000 per room, and ongoing royalties around 5–6% of gross revenue plus marketing fees.
Cost Breakdown
| Cost Category | Low | Average | High | Typical Drivers |
|---|---|---|---|---|
| Materials | $600,000 | $1,000,000 | $1,600,000 | Lobby, guest rooms, corridors, exterior finishes |
| Labor | $300,000 | $520,000 | $900,000 | Crew rates, schedules, local wage levels |
| Equipment | $80,000 | $140,000 | $240,000 | HVAC, kitchens, laundry, IT |
| Permits | $15,000 | $40,000 | $70,000 | Local rules and fees |
| Delivery/Disposal | $10,000 | $25,000 | $45,000 | Logistics and waste handling |
| Warranty | $5,000 | $12,000 | $20,000 | Limited coverage on FF&E and structure |
| Overhead | $20,000 | $45,000 | $80,000 | Project management, design, insurance |
| Contingency | $50,000 | $120,000 | $250,000 | Unforeseen site conditions |
| Taxes | $25,000 | $60,000 | $100,000 | Property, sales, local taxes |
What Drives Price
Regulatory and design requirements can add costs through accessibility rules, energy standards, and brand specifications. Site condition and location influence excavation, foundation, and permitting timelines.
Two numeric drivers often seen are per-room build-out and required FF&E quality levels, which can shift total project cost by ±15–30% in practice.
Cost By Region
Regional differences significantly affect construction and labor prices. In the table below, each region shows typical deltas relative to a national base, plus a midpoint range for a 100-room property.
| Region | Low Delta | Average Delta | High Delta | Notes |
|---|---|---|---|---|
| Northeast Urban | +5% | +12% | +22% | Higher labor and permit costs |
| Midwest Suburban | 0% | 0% | +8% | Balanced costs |
| South Rural | -8% | -5% | 0% | Lower land and labor costs |
Real-World Pricing Examples
Basic Scenario assumes a 90-room conversion in a secondary market with standard finishes, no major site issues.
- Specs: 90 rooms, standard FF&E, existing building
- Estimated hours: 20–28 weeks primary build, 12–16 weeks pre-opening
- Totals: Initial franchise fee $18,000; Build-out $9,000 per room; FF&E $28,000 per room; Royalties 5% of gross; Total project $1.4–1.8 million
Mid-Range Scenario includes a 100-room new-build in a regional market with enhanced finishes and IT integration.
- Specs: 100 rooms, upgraded lobby, improved energy systems
- Estimated hours: 24–30 weeks
- Totals: Franchise fee $25,000; Build-out $140,000 per room; FF&E $40,000 per room; Royalties 5.5% of gross; Total project $1.9–2.6 million
Premium Scenario covers a resort-adjacent property with luxury accents and robust service infrastructure.
- Specs: 120 rooms, premium fixtures, advanced tech
- Estimated hours: 26–34 weeks
- Totals: Franchise fee $40,000; Build-out $180,000 per room; FF&E $60,000 per room; Royalties 6% of gross; Total project $2.8–3.8 million
Ways To Save
Plan regionally for cost efficiency by selecting markets with favorable permitting timelines and available labor pools. Bulk FF&E sourcing and standard design packages can reduce per-room spend.
Negotiate milestones with the franchisor for phased openings and pre-opening grants where offered. Efficient project management minimizes delay costs and interim financing needs.
Assumptions: region, specs, labor hours.