ITEM 1
THE FRANCHISOR, AND ANY
PARENTS, PREDECESSORS AND AFFILIATES
To simplify the language in
this Disclosure Document, "we," "us," "our" or
"Choice" means Choice Hotels International, Inc., the franchisor.
"We," "us," or "our" docs not include the officers,
directors or shareholders of Choice Hotels International, Inc. "You"
or "Member" means the person who buys the franchise. "You"
may be an individual, corporation, partnership, limited liability company or
other legal entity.
Under this Disclosure Document,
you can purchase a membership to operate a hotel under the service mark ASCEND
COLLECTION� ("ASCEND COLLECTION Mark"). A hotel operated under the
ASCEND COLLECTION Marks is referred to as an "ASCEND COLLECTION
Hotel" or "Hotel." You may either convert an existing hotel to
an ASCEND COLLECTION Hotel or construct a new hotel that meets the
specifications for ASCEND COLLECTION Hotels, as established by us.
Choice Background.
We are a Delaware corporation
formed under the name Quality Inns International, Inc. We changed our corporate
name to Choice Hotels International, Inc. on July 25, 1990. From November 1,
1996 to October 15, 1997, our corporate name was Choice Hotels Franchising,
Inc. Our corporate name has been Choice Hotels International, Inc. since
October 15, 1997. Our principal business address is 10750 Columbia Pike, Silver Spring, Maryland 20901. Our agents for service of process are disclosed in Exhibit B
of this disclosure document.
Our business began in 1939 when
seven independent motel owners in Florida met to discuss how they could better
satisfy the needs of their customers. Over the next few years, the group
continued to meet and share best practices. In 1941, the group formalized its
relationship by creating a membership association called Quality Courts United,
thereby creating the nation''s first hotel chain. The vision of the members of
Quality Courts United was to develop quality and other standards for their
customers, as well as to refer guests to each other''s motels.
In January 1963, the
organization officially became a for-profit corporation operating under the
name Quality Courts Motels, Inc. Shortly thereafter, a training school, a
central reservations system and hotel directory were added to the organization.
Since that time, the company has changed its name to Choice Hotels
International, Inc. and has expanded and further developed the Choice system of
hotels ("Choice System") through the development of additional hotel
brands and expansion into new markets.
We are also the successor to
the Suburban Extended Stay Hotel business. On December 5, 2005, we entered into
an Agreement of Merger by which we acquired all of the outstanding shares of
Suburban Franchise Holding Company, Inc. ("SFHC") through a merger of
SFHC with Choice''s wholly owned subsidiary, CHI Merger Sub, Inc. SFHC is now a
wholly owned subsidiary of ours with a principal business address that is the
same as ours. At the time we purchased SFHC, all of its interests were owned by
franchisees of the Suburban Extended Stay Hotel system. SFHC wholly owned
subsidiary, Suburban Franchise Systems, Inc. ("SFS") has a principal
business address that is the same as ours. SFS had offered franchises for
Suburban Extended Stay Hotels since 1990.
ASCEND COLLECTION Hotels. We franchise individuals,
corporations and partnerships the right to operate full-service, upscale hotels
under the ASCEND COLLECTION Marks. From April 1, 2005 through April 30, 2008,
we offered franchises for a similar concept under the name, CLARION
COLLECTION�. As of December 31, 2007, there were 37 Clarion Collection
franchises.
ASCEND COLLECTION Hotels are a
special group of boutique, unique and historic hotels that have a strong local
identity and share a common commitment to outstanding guest service. Every
ASCEND COLLECTION property in the ASCEND COLLECTION system ("ASCEND
COLLECTION System") is an experience unto itself, satisfying travelers''
growing desire for variety and creativity in the hotel sector. ASCEND COLLECTION
Hotels range from historic to themed to contemporary and offer amenities,
including the on-site operation of an upscale dining restaurant or a location
within one city block of an upscale dining restaurant. ASCEND COLLECTION Hotels
typically will be conversions of existing hotels; however, we will consider new
construction if the proposed exterior and interior design meet the standards
for an ASCEND COLLECTION Hotel. ASCEND COLLECTION Hotels retain their existing
name followed by the words, "an ASCEND COLLECTION Hotel" for local
marketing and signage purposes.
Your receipt of this Disclosure
Document does not mean that you will be approved as a franchisee or that you
may develop or open an ASCEND COLLECTION Hotel. Before you may develop and open
an ASCEND COLLECTION Hotel, you must submit a Membership Application (Exhibit
F) and pay an Affiliation Fee; we must approve you as a franchisee; we must
approve the location of your proposed hotel; you must attend and successfully
complete our training programs; we and you must sign the Membership Agreement
(Exhibit D); and you must pay the Affiliation Fee. You should not acquire any
interest in a site for an ASCEND COLLECTION Hotel until, at the earliest, you
are approved by us as a franchisee, and we approve your proposed or existing
hotel as an ASCEND COLLECTION Hotel.
General Market and
Conditions.
The market for your services
will depend on your property''s location, size and its type of operation (e.g.,
resort, hotel for frequent business travelers, etc.). Franchisees typically
seek customers and business referrals from the local community and solicit
business from tour and travel groups on a regional and national level.
Your competitors will include
other chain-affiliated (including our other hotel brands) and independent
hotels and motels in the area where your Hotel is located.
Other Choice Brands.
We franchise several other
hotel brands under various marks. We have franchised full-service, mid-priced
hotels under the service mark QUALITY� since 1968 and under the service mark
CLARION� since 1987. The nation''s oldest hotel brand, Quality Inns provide an
accommodating environment, friendly service and a free continental breakfast.
All-suites hotels within the QUALITY concept are known as QUALITY SUITES�
hotels. Clarion hotels offer guests a quality of service, amenities and
inviting atmosphere associated with finer hotels, but at an affordable price.
These hotels offer free high-speed Internet access, and most locations offer a
full-service restaurant, room service, swimming pool and fitness center.
We have franchised
limited-service, mid-market hotels under the service mark COMFORT� since 1981
and under the service mark SLEEP INN� since 1987. We also have franchised limited-service
budget hotels under the service mark ECONO LODGE� since 1990 and under the
service mark RODEWAY INN� since 1990. COMFORT hotels, our largest brand,
provide a warm atmosphere and personal, helpful service, including breakfast,
in-room coffee and high-speed Internet access. All-suites hotels under the
COMFORT� concept are offered under the COMFORT SUITES� mark, SLEEP hotels
provide good service and exceptional value in a familiar atmosphere with
carefully-maintained facilities. Hotels that contain at least 10% suites may
operate under SLEEP INN & SUITES� marks. Econo Lodge hotels provide a
comfortable stay at a great value for business and leisure travelers. Rodeway
Inn hotels are budget segment hotels for value-oriented travelers that offer a
welcoming and efficient environment at an economy price.
We have franchised
extended-stay, limited-service hotels under the service mark MAINSTAY SUITES�
since 1996 and under the service mark SUBURBAN EXTENDED STAY HOTEL� since 2005.
MainStay Suites offer residential style amenities and affordable rates. Each
MainStay Suites room offers ample space for an extended stay, with separate
areas for dressing, relaxing, sleeping and eating, and includes a well-equipped
kitchen. Suburban Extended Stay Hotel, the largest chain of franchised economy
extended-stay hotels in the United States, offers competitive rates for stays
of one week or more. Rooms at Suburban Extended Stay Hotels are spacious and
feature a well-equipped kitchen and free high-speed Internet access.
We have franchised all-suites
hotels under the service mark CAMBRIA SUITES� since 2004. Cambria Suites is an
upscale, select-service hotel brand designed for guests who want to take their
lifestyle with them when traveling. Cambria Suites hotels feature a stylish
design that is more intimate than traditional hotel decor, with guest suites
that are 25 percent larger than standard hotel rooms.
From October 1995 to December
1998, we also franchised quick service, name brand integrated, limited menu
food courts under the name CHOICE PICKS�. We do not operate any CHOICE PICKS�
food courts nor are there currently any franchised CHOICE PICKS� food courts.
On December 31, 2007, there
were 4 Cambria Suites hotels franchises, 795 Quality Inn hotel franchises, 30
Quality Suites hotel franchises, 129 Clarion hotel franchises, 1,433 Comfort
Inn hotel franchises, 478 Comfort Suites hotel franchises, 220 Sleep Inn hotel
franchises, 126 Sleep Inn & Suites hotel franchises, 825 Econo Lodge hotel
franchises, 276 Rodeway Inn hotel franchises, 27 MainStay Suites hotel
franchises and 54 Suburban Extended Stay hotel franchises in the United States.
Industry Specific Laws and
Regulations.
Your ASCEND COLLECTION Hotel
will be subject to significant federal, state and local laws and regulations
applicable to businesses generally and those specific to the hotel industry,
including regulations regarding zoning and building, occupational health and
safety, labor, licensing and bonding, insurance, advertising, liquor licenses,
sales, income and other taxes, and the Americans with Disabilities Act. There
may be other laws and regulations applicable to the hotel industry or
businesses generally, with which you must comply. You should consult with your
attorney concerning these laws and regulations.
Except as described in this
Item 1, we have not offered franchises
in any other line of business, and we do not engage in any business not
described in this Item 1.
