How much does a Red Roof Inn franchise cost in 2026?
Last updated: By Nate Solomon, Matthews Hotel Markets
Red Roof Franchising's disclosure document, issued April 9, 2026, estimates $264,850 to $1,596,100 to convert a 65-room property to a Red Roof Inn, and $7,253,500 to $8,899,600 to build an 82-room one, before land. The initial franchise fee is $27,000 for up to 100 rooms plus a $3,000 application fee. The royalty is 5 percent and the marketing and reservation fee 4 percent of gross room revenues.[1]
Key takeaways
- Initial franchise fee: $27,000 for up to 100 guest rooms, plus $300 per additional room, on top of a $3,000 application fee.[1]
- Royalty: 5 percent of gross room revenues. Marketing and reservation fee: 4 percent, which can rise to a maximum of 5 percent.[1]
- Transfer: a $2,500 transfer application fee plus a flat $15,000 transfer fee.[1]
- Term: 20 years, with a 10-year renewal for a complying owner at 50 percent of the then current initial fee.[1]
- Fees change every year. The current FDD and the signed franchise agreement govern, not this page.
What does Red Roof charge up front for a franchise?
The 2026 Red Roof Inn FDD lists a $27,000 initial franchise fee for hotels with up to 100 guest rooms, $300 for each additional room, and a separate $3,000 application fee.[1]
The application fee is refundable only if Red Roof rejects the application before visiting the site or providing drawings or technical information. The initial franchise fee is never refundable. Red Roof states that in 2025 its initial franchise fees ranged from $12,000 to $27,000 and its application fees from $0 to $3,000, and that its fees are subject to negotiation (Item 5, pp. 8, 10).[1]
The software license fee for the reservation platform and property management system is $15,000. The opening package, a professional photo shoot and training materials, is $2,500. Training is $1,000 to $1,250 for the general manager's virtual course, $1,000 to $1,600 per person for new owner orientation, and $4,500 to $5,000 for the on-site trainer at opening. A re-visit after a failed opening inspection is $2,250 to $5,000. A qualifying women-owned or veteran-owned business receives a $10,000 reduction in the initial fee, repayable if the inn is transferred before the first anniversary of opening (Item 5, pp. 8-9).[1]
What are the ongoing Red Roof Inn franchise fees?
The 2026 Item 6 lists a 5 percent royalty and a 4 percent marketing and reservation fee, both on gross room revenues, plus a 4 percent RediRewards charge on revenue from preferred members.[1]
The marketing and reservation fee and the RediRewards fee can each rise to a maximum of 5 percent. Red Roof says it may currently rebate up to 0.5 percent of gross room revenues for a 12-month period to an inn that meets its written guest satisfaction standards, a program it may change or end at any time (Item 6, p. 10).[1]
Distribution is charged per booking or as commission. Booking fees are $6.60 to $7.00 per global distribution system booking, $3.30 to $3.60 per third-party internet booking and $1.99 to $2.25 per direct connect booking, and a mobile app booking is $1.75. Commissions and listing fees run from 0 to 25 percent of the net booking. The digital performance marketing fee is no less than 3 percent of gross room revenues on a qualifying stay and can be raised to no more than 15 percent. Centrally billed RediBill revenue carries 5 to 6 percent (Item 6, pp. 11, 17-18).[1]
The reservation platform and property management system fee is currently $490 per month plus $3.85 per room per month, and may rise by up to 5 percent a year. The mandatory revenue management software is 0.3 percent of gross room revenues, with a $100 minimum and a $400 maximum per month. Reputation response service is $125 to $250 (Item 6, pp. 12, 18).[1] These charges apply to different bases, so they cannot be added into one rate.
How much does it cost to convert to or build a Red Roof Inn?
The 2026 Item 7 estimates $264,850 to $1,596,100 to convert a 65-room property to a Red Roof Inn or Red Roof Inn and Suites.[1]
Construction and renovation run $35,750 to $650,000 and furniture, fixtures, soft goods and equipment $41,600 to $455,000. Signage is $10,000 to $51,000. The franchisor's own fees are fixed at $30,000 for the application and initial fee, and the reservation platform and computer systems run $16,500 to $22,000. Red Roof says it may let a converting owner complete the property improvement plan in phases after the hotel has converted, so part of the estimate may be spent after opening. A 65-room Red Roof PLUS+ conversion is estimated at $353,000 to $1,659,100 (Item 7, pp. 30-32, 37).[1]
New construction of an 82-room Red Roof Inn is estimated at $7,253,500 to $8,899,600, excluding land, with facility construction at $5,986,000 to $6,906,500. Red Roof says a typical inn needs about two acres and that it does not estimate the cost of real estate. The FDD states no per-room totals, so none are printed here (Item 7, pp. 19-20, 30).[1] Financing for this work is covered at brand conversion financing and PIP and renovation loans. The plan itself is defined at PIP.
How long is a Red Roof Inn franchise agreement, and can I renew?
The Red Roof term is 20 years, though the FDD says an earlier termination date may be set under certain conditions, and a complying owner may renew for 10 years.[1]
To renew, the owner must not be in default, must have paid all monetary obligations, and must submit a renewal application, complete training and upgrading requirements, sign a general release, sign the then current franchise agreement, which may be materially different, and pay a renewal fee of 50 percent of the then current initial franchise fee. Item 17 lists no termination right for the franchisee, and says Red Roof may not terminate without cause (Item 6, p. 14; Item 17, p. 55).[1]
What does it cost to leave the Red Roof system early?
Red Roof liquidated damages are $100,000 before opening, and after opening the greater of $100,000 or a formula built on 36 months of average fees.[1]
The formula is the average monthly royalty, marketing and reservation fee and RediRewards fee for the 36 months before termination, or for the months operated if fewer, multiplied by the lesser of 36 or the months remaining in the term. Payment is due within five days. Closing the inn or starting an unauthorized remodel before the agreement expires carries a separate $25,000 fee. An owner who keeps using the marks after termination owes $2,500 per day plus attorney's fees, and reinstatement after a termination or a removal from the reservation system is currently $5,000 (Item 6, pp. 14, 16-17).[1]
What happens to the Red Roof franchise when I sell the inn?
Red Roof approves all transfers, and the 2026 FDD charges a $2,500 transfer application fee plus a $15,000 transfer fee payable at closing.[1]
The buyer signs the then current franchise agreement and a transfer addendum, must have proper qualifications, and its owners sign a guarantee. The seller pays money owed, signs a general release and remains liable for obligations that arose before the transfer. The buyer's manager must be trained, the new majority owner attends new owner orientation at $1,000 to $1,600 per person, and the inn must conform to current standards. Red Roof also holds a right of first refusal to buy on the terms of any bona fide offer the owner wishes to accept (Item 6, p. 14; Item 17, pp. 56-57).[1] The flag decision is weighed at Should I buy a branded or independent hotel?, and the contract is defined at franchise agreement.
What does Item 19 say about Red Roof Inn performance?
The 2026 Item 19 reports that 567 franchised Red Roof Inn and Red Roof PLUS+ inns averaged a $68.65 daily room rate, 54.0 percent occupancy and $37.10 RevPAR in 2025.[1]
The tables cover inns open and operating for at least one year and for all of 2025, with any temporary closure under 90 days: 567 franchised inns and 27 affiliate-owned inns. Twenty-nine franchised inns that opened in 2025 are excluded. Among the franchised inns the median RevPAR was $35.72, and 259, or 45.7 percent, met or exceeded the average. The 508 franchised Red Roof Inns averaged $35.79 RevPAR and the 59 franchised Red Roof PLUS+ inns $45.91. The 27 affiliate-owned inns averaged $46.91 (Item 19, pp. 58-62).[1]
Red Roof also reports an average brand contribution of 36.4 percent of room revenue for the franchised inns, with a median of 30.8 percent. Its definition counts the brand website, the call center, group and national sales, global distribution systems, third-party websites, and RediRewards members who book directly with the inn. The 2025 RevPAR index against each inn's competitive set averaged 103.2 for franchised inns (Item 19, pp. 59, 63).[1]
Red Roof states that the data has not been audited and that there is no assurance a buyer will earn as much. Item 19 gives rate, occupancy and revenue measures only. It gives no expenses and no profit, and this page draws no profit conclusion from it (Item 19, pp. 63-64).[1] The measures are defined at RevPAR and ADR.
Red Roof Inn and Red Roof PLUS+ franchise fees, 2026 FDD issued April 9, 2026
| Fee | Amount | Where in the FDD |
|---|---|---|
| Application fee | $3,000[1] | Item 5, p. 8 |
| Initial franchise fee | $27,000 for up to 100 guest rooms, plus $300 per additional room[1] | Item 5, p. 8 |
| Reservation platform and PMS software license fee | $15,000[1] | Item 5, p. 9 |
| Royalty | 5% of gross room revenues[1] | Item 6, p. 10 |
| Marketing and reservation fee | 4% of gross room revenues, maximum 5%[1] | Item 6, p. 10 |
| RediRewards preferred member program | 4% of gross room revenues from preferred members, maximum 5%[1] | Item 6, p. 10 |
| Booking fees | $6.60 to $7.00 per GDS booking; $3.30 to $3.60 per third-party internet booking; $1.99 to $2.25 per direct connect booking[1] | Item 6, p. 11 |
| Digital performance marketing program | No less than 3%, no more than 15%, of gross room revenues on an applicable stay[1] | Item 6, p. 18 |
| Reservation platform and PMS fee | Currently $490 per month plus $3.85 per room per month[1] | Item 6, p. 12 |
| Revenue management software | 0.3% of gross room revenues, $100 minimum and $400 maximum per month[1] | Item 6, p. 12 |
| Transfer application fee and transfer fee | $2,500 and $15,000[1] | Item 6, p. 14 |
| Renewal fee | 50% of the then current initial franchise fee[1] | Item 6, p. 14 |
| Liquidated damages, after opening | Greater of $100,000 or average monthly royalty, marketing and RediRewards fees times the lesser of 36 or the months remaining[1] | Item 6, p. 16 |
| Estimated initial investment, 65-room conversion | $264,850 to $1,596,100[1] | Item 7, p. 31 |
| Estimated initial investment, new 82-room Red Roof Inn | $7,253,500 to $8,899,600, excluding land[1] | Item 7, p. 20 |
Worked example
Hypothetical: a year of Red Roof Inn brand fees on assumed room revenue
Hypothetical. Assume a 65-room Red Roof Inn earns $900,000 of gross room revenues in a year. The revenue figure and the member share below are assumptions for arithmetic. They are not forecasts and they are not figures from the FDD.
Royalty at 5 percent: $900,000 x 0.05 = $45,000.[1]
Marketing and reservation fee at 4 percent: $900,000 x 0.04 = $36,000.[1]
Together: $81,000, or 9 percent of room revenue.
If RediRewards preferred members account for $250,000 of that revenue, the program charge at 4 percent is $10,000.[1]
Reservation platform and property management system fee: $490 + 65 rooms x $3.85 = $740.25 per month, or $8,883 for the year. Revenue management software at 0.3 percent is $2,700 for the year, or $225 per month, inside the $100 to $400 band.[1]
On the same assumptions, the three fees in the liquidated damages formula total $91,000 a year, or $7,583.33 per month. With 36 or more months left, $7,583.33 x 36 = $273,000, which is more than the $100,000 floor.[1] Booking fees, commissions and digital marketing charges come on top and depend on the hotel's booking channels, so they are not estimated here.
Frequently asked
- How much does a Red Roof Inn franchise cost?
- The 2026 FDD lists a $27,000 initial franchise fee for up to 100 rooms, a $3,000 application fee, a 5 percent royalty and a 4 percent marketing and reservation fee. Item 7 estimates $264,850 to $1,596,100 to convert a 65-room property.[1]
- What percent of revenue does Red Roof take?
- A 5 percent royalty plus a 4 percent marketing and reservation fee on gross room revenues. The 4 percent RediRewards charge on member revenue, booking fees, commissions and technology fees are billed on other bases on top.[1]
- I'm buying a Red Roof Inn. What is the transfer fee?
- A $2,500 transfer application fee plus a $15,000 transfer fee due at closing. The buyer signs the then current franchise agreement and the inn must conform to current standards. Red Roof holds a right of first refusal.[1]
- How much does it cost to build a new Red Roof Inn?
- The 2026 Item 7 estimates $7,253,500 to $8,899,600 for an 82-room Red Roof Inn, excluding land. Red Roof says a typical inn needs about two acres.[1]
- Can I renew a Red Roof Inn franchise?
- Yes, for 10 years, if the owner is not in default, completes training and upgrades, signs the then current agreement and a release, and pays 50 percent of the then current initial franchise fee.[1]
- What does it cost to de-flag a Red Roof Inn early?
- After opening, the greater of $100,000 or the average monthly royalty, marketing and RediRewards fees times the lesser of 36 or the months remaining. It is due within five days of termination.[1]
- Will these Red Roof Inn fees be the same next year?
- Not necessarily. The FDD is reissued every year, the marketing and RediRewards fees can each rise to 5 percent, and the technology fee can rise by up to 5 percent a year. The current FDD and the signed agreement govern.[1]
Who wrote this
Hospitality Associate, Matthews Hotel Markets
(512) 839-6999nate.solomon@matthews.comLinkedIn
Reviewed by Luke Thompson, VP & Director, Capital Markets.
Sources
- Red Roof Inn Franchise Disclosure Document (issued April 9, 2026): Item 5, pp. 8-10; Item 6, pp. 10-19; Item 7, pp. 19-37; Item 17, pp. 55-58; Item 19, pp. 58-64. Minnesota CARDS document 35927-202604-09, file number 5824, Clean FDD · Red Roof Franchising, LLC, filed with the Minnesota Department of Commerce · accessed September 18, 2026
- Matthews Hotel Markets September 2026 rate sheet · Matthews Hotel Markets · accessed September 18, 2026
Related
Other questions in this guide
Terms defined in the glossary
Our own data
Matthews Hotel Markets sells and finances franchised hotels, so we read these disclosure documents alongside owners and buyers.