AMERICINN - FDD UFOC ITEM 7 Detail

ITEM 7

YOUR ESTIMATED INITIAL INVESTMENT

ESTIMATED INITIAL INVESTMENT

¹While actual costs will vary depending upon certain factors, including the size and location of your Americlnn�, the site conditions, amenity upgrades and the cost of the land, the above tables are estimates of the total cost to construct and open a typical 59-room Americlnn� and a typical 100-room Americlnn� with an indoor pool, whirlpool and sauna, one free-standing sign and the necessary furniture, fixtures and equipment.

²lf you are converting an existing hotel or motel into an Americlnn�, you also pay us a $2,500 Property Improvement Plan Inspection Fee.

³See Items 5 and 11 of this Disclosure Document and Article 12(A) of the Franchise Agreement.

⁴Land costs for your Americlnn� will vary depending upon the size and location of your Americlnn� as well as upon the local real estate market and upon the zoning and "set-back" requirements, which are your responsibility to investigate and confirm. Site preparation costs will also vary from location to location. The land for your Americlnn� must be purchased by you. You may not lease the land for your Americlnn�. Typical locations are on major interstate highways or high traffic areas of communities with populations of between 5,000 and 150,000, as well as in suburbs of larger metropolitan areas. Generally, a typical 59-room Americlnn� will require a tract of land which is between 1.6 to 2.2 acres in size depending on the site configuration and zoning requirements. The foot print of a typical 59-room Americlnn� is approximately 17,771 square feet. In addition, a typical 100-room Americlnn� generally will require a tract of land which is between 2.3 and 3.5 acres in size depending on the site configuration and zoning requirements. A 100-room Americlnn� will typically have a foot print of approximately 18,000 square feet.

^sWifI vary depending upon the geographic location, market conditions, the degree of your supervision of construction, the building design and type of construction materials used.

⁶You must purchase or lease all of the furniture, fixtures and equipment for your Americlnn� which are described in our Operations Guide and/or Minimum Design Standards Manual. The per room average cost of the furniture, fixtures and equipment for an Americlnn� depends upon quality, transportation costs, labor costs, discounts and other economic factors. The furniture, fixtures and equipment may be purchased outright, financed through a bank or other financial institution, or leased. See Items 5 and 8 of this Disclosure Document.

⁷You must purchase or lease from a vendor approved by us a free standing sign or other sign which has been approved by us for the location of your Americlnn�, which fully complies with our standard sign plans and specifications. You pay for all costs related to the sign, including the purchase price or lease payments, compliance with laws, permits and licenses, construction, installation and erection of the sign, sign base and foundation (if not included in the building costs), electricity, repairs, maintenance, insurance and taxes. The cost of purchasing and installing the sign may vary depending on the size, height and type of the sign, location, shipping costs, quality and other economic factors. Depending upon the location and size of your Americlnn�, it may be desirable to install an additional Americlnn� sign or a reader board. You must maintain liability and property damage insurance for the sign(s), which will generally be included in the insurance coverage for the building and land. See Article 14 of the Franchise Agreement.

⁸You must purchase or lease a computerized hospitality property management system/computer ("PMS") which has been designated by us. You must also purchase and install all upgrades to your PMS designated by us according to the time tables established by us. The PMS typically consists of three work stations, a server, monitors, keyboards, two printers and a call accounting system in a networked configuration. The PMS is to be used for front desk management, reservation management with an interface to the Central Reservation System ("CRS"), and e-mail/internet access. The amount listed is the estimated cost to purchase and install the hardware and software. You must also pay an annual fee for maintenance and support for your PMS system since we do not provide these services. See Article 7(X) of the Franchise Agreement and Items 6 and 11 of this Disclosure Document.

^ou must make hospitality grade, high-speed Internet access ("HSIA") available in the guest rooms, lobby, meeting rooms and hospitality rooms of your Americlnn�. This requires you to enter into a Property Service Agreement for the purchase of hardware, software, maintenance and support from and to make certain payments to an approved third-party vendor. To be approved, the services provided by the third-party vendor must meet our minimum specifications, which we may periodically revise and supplement. Your cost of providing HSIA service in your Americlnn� and for maintaining and supporting the service may change periodically. The amount listed is the estimated cost to purchase and install the hardware and software. You must also pay a monthly fee for maintenance and support for your HSIA since we do not provide these services. See Article 7(AA) of the Franchise Agreement and Items 6 and 11 of this Disclosure Document.

¹⁰Opening inventory items include sheets, pillowcases, pillows, blankets, bedspreads, towels, washcloths, plastic glasses, ice buckets and liners, trays, napkins, wastebaskets and liners, ashtrays, matches, shower curtains, bath and face soap, toilet paper and shampoo. See Item 8 of this Disclosure Document.

¹¹ You must purchase liability insurance, property insurance, automobile liability insurance and other necessary insurance. Your liability insurance must have at least $5,000,000 combined single limit of coverage. Property insurance coverage must have limits equal to at least "replacement" cost. The insurance policies must name us as an additional insured and must be issued by companies rated "A," "A+" or "A-" by A.M. Best & Co. The expenditures set out above for insurance must be made annually. See Article 15 of the Franchise Agreement.

¹²ln financing and constructing your Americlnn� and purchasing the land, you can expect to incur expenses for title insurance, legal fees, appraisals, construction period interest, loan origination fees and other miscellaneous expenses.

¹³We recommend that you maintain a contingency fund in these amounts to cover unanticipated construction costs, cost over-runs and other unanticipated expenses.

¹⁴This estimates the funds you will need during the initial three-month phase of operations of your Americlnn�. It is estimated that this amount will be expended by you for wages and travel expenses during training; insurance premiums; utility deposits; initial advertising; initial accounting fees; payment of other wages; and other expenses incurred by you during the initial weeks of operation. Your working capital requirements may increase or decrease depending upon the location and size of your Americlnn�, number of employees, labor rates, minimum wage laws, cost of goods and supplies, various utility deposits, other economic factors and whether you will own or lease the furniture, fixtures, equipment and sign(s).

¹⁵These totals exclude the cost of the real estate and site preparation expenses. Depending upon your creditworthiness, other security that you may have and the availability of financing generally, we believe that you may be able to finance up to 75% of the total investment required for your Americlnn�. If this financing is available, you must make an initial cash investment of between $1,099,859 and $1,390,465, excluding the down payment on the real estate and site preparation expenses, for a typical 59-room Americlnn�. This required initial cash investment would increase to between $1,928,709 and. $2,418,101 for a

typical 100-room Americlnn . We do not offer direct or indirect financing to our franchisees for any items. See Item 10 of this Disclosure Document.

¹⁶Except for utility deposits, generally none of the estimated expenditures listed in the table above are refundable under any circumstances.

In addition, to the above, you may also decide to add other "upgrades" to your Americlnn�, including a porte cochere, balconies and other equipment which will cause the costs to be somewhat higher.

We have prepared these estimates based upon our experience, including information that we have collected from our franchisees. Except as expressly indicated otherwise, these estimates cover your initial cash investment up to the opening of your Americlnn�. They do not provide for your cash needs to cover any financing incurred by you or your other expenses. Similarly, the above estimates do not include the cost of acquiring the land or preparing the site for your Americlnn�. You should not plan to draw income from the operation during the start-up and development stage of your business, the actual duration of which will vary materially from Americlnn to Americlnn� and cannot be predicted by us for your Americlnn� (and which may extend for longer than the three-month "initial phase" described in Note 12). You must have additional sums available, whether in cash or through a bank line of credit, or have other assets, which you may liquidate or against which you may borrow, to cover any other expenses and operating losses that you may sustain, whether during your start-up and development stage, or beyond. The amount of necessary reserves will vary greatly from franchisee to franchisee and will depend upon many factors, including the rate of growth and success of your business, which in turn will depend upon certain factors, including the demographics and economic conditions in the area in which your Americlnn� is located, the presence of other hotels and motels in the vicinity of your proposed Americlnn�, your ability to operate efficiently and in conformance with our recommended method of doing business, and competition. Because the exact amount of reserves will vary from operation to operation and cannot be meaningfully estimated by us, we urge you to retain the services of an experienced accountant or financial advisor to develop a business plan and financial projections for your particular operation.