How to Buy a Hotel Franchise

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Owning a hotel franchise can be a rewarding experience.
Owning a hotel franchise can be a rewarding experience. (Image: hotel image by muro from Fotolia.com)

Buying a hotel franchise is one of the quickest ways to get into the hotel business, but requires a significant amount of time investment to be successful. You will need to find a hotel brand that is well known and that you personally find attractive. Another key to success for buying a hotel franchise is securing adequate financing to support both your initial franchise star-tup fees as well as the initial operating costs for the hotel. Many new hotel franchises fail due to the failure of the new owner in allotting sufficient money to get the business running.

View the available hotel franchises at the Business.com or U.S. Small Business Administration websites (see References). These resources will contain information to help you narrow down your choice of hotel franchise and also have recommended amounts of money to have secured before making your investment.

Determine the amount of money that you have to personally invest into the business. Then apply for a small business loan from the U.S. Small Business Administration (SBA). The SBA offers a franchise registry that details the recommended start-up costs and total amount of money that you should have on hand before purchasing and opening an hotel franchise.

Reduce the list of potential hotel franchises to three or less. You can use the Uniform Franchise Offering Circular (UFOC) or the FranData websites to find historic information on the franchise opportunities that you are considering.

Consider spending a night in each of the hotel franchises that have made your short list of investment opportunities to get a personal feel for the brand and quality of stay offered by the hotel.

Apply for a franchise license from your top choice. Many franchises will require a meeting with you in person to review your application after submission. If you have sufficient funding and are approved for the franchise, you will either be conditionally or fully approved depending on the company's requirements.

Determine the location for your hotel franchise and verify that it meets any distance requirements your parent company may have for other hotel franchises of the same brand. Many new hotel franchise investors will elect to buy an existing hotel to re-brand under the new franchise, while others will elect to build a new hotel building. Buying an existing hotel building will save you money, but there may be challenges to the current location that you will need to consider, such as the historic throughput, operating costs, and taxes, before making your purchase.

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