CHOICE HOTELS - FDD UFOC ITEM 7 Detail

ITEM 7

ESTIMATED INITIAL INVESTMENT

This is the initial franchise offering for ASCEND COLLECTION Hotels, so we do not have any historical figures regarding the initial investment cost for opening an ASCEND COLLECTION Hotel. The following tables present an estimate of the initial investment (not including land costs and real estate taxes) required to convert an existing hotel to an ASCEND COLLECTION Hotel and to construct and open a newly constructed ASCEND COLLECTION Hotel. The figures provided in these tables are based in part on our past experience offering CLARION COLLECTION Hotels which is a similar concept.

The cost of renovating or constructing each property has the potential to vary greatly and will depend on factors unique to your situation and your property. Therefore, your actual costs may fall outside the estimated ranges stated below.

YOUR ESTIMATED INITIAL INVESTMENT

Note 1: These figures are based on available data regarding the cost of converting an existing hotel to a CLARION COLLECTION Hotel, which is our existing brand that is most similar to the ASCEND COLLECTION. Unusually high locally imposed development fees as well as the condition of an existing Hotel''s upgrades necessary to meet our standards might impact initial expenses. If you are converting a CLARION COLLECTION Hotel to an ASCEND COLLECTION Hotel, your total conversion costs will likely be significantly less than the estimates provided in this table since you may already have installed goods and services that meet brand standards.

Note 2:����� Estimates based on an 80-guestroom hotel.

Note 3:���� Once a Membership Agreement is signed, this fee is not refundable.

Note 4: Real estate costs vary considerably. Your land costs depend on land prices in your area and on the site you select. Sites in major urban centers and/or popular resort destinations are desirable.

Note 5: It is likely that only a major reconfiguration or expansion project will incur costs for architectural plans & inspections, soil tests, environmental impact study, and construction.

Note 6:���� These policies must provide limits of coverage as stated in the Membership Agreement.

Note 7: Statutory Workers Compensation and Employers Liability insurance with minimum Employers Liability limits of coverage as stated in the Membership Agreement.

Note 8: Opening inventory of supplies includes appropriate ASCEND COLLECTION items/brochures, linen, paper supplies and housekeeping supplies.

Note 9: You must pay the costs of travel, living and other expenses incurred by you and your employees while attending our training programs. The amount of these expenses will depend on the distance your employees must travel, the type of accommodations, the number of employees attending the training programs, and their respective wages.

Note 10: The estimate of $14,000-525,000 is based on a wired solution for the Hotel size shown and includes wiring, routers, software, server, splitters, etc. Wireless solutions could range from $7,500 - $9,500, depending upon the number of access points.

You must also arrange and pay for the Incoming Broadband Service. You may purchase this from any available source. If you obtain this service through vendors with whom we have made arrangements, we currently estimate that it will cost between $3,700 - 12,800 per year. This estimate is based on the Hotel size shown and currently includes high speed Internet Access (delivered by T-l, DSL or a Fractional T-l) and 24/7 support provided by a third party with Tier I and Tier II levels. Your costs will vary depending upon bandwidth usage and your Hotel''s size and location.

Although we currently permit you to purchase these services from any available source, in the future we may require you to use a designated source, as necessary to maintain overall Choice System standards.

Note 11: We based these estimates on our experience with hotel franchises and discussions with hotel business people. These estimates are also based on the approximate cost of converting an existing hotel to an ASCEND COLLECTION hotel.

Note 12:��� All fees are non refundable unless otherwise stated.

Note 13:��� You should review these figures carefully with a business advisor before making any decision to purchase the franchise.

YOUR ESTIMATED INITIAL INVESTMENT

Note 1: The figures provided in this table is based in part on our past experience offering CLARION COLLECTION hotels. Unusually high locally imposed development fees might impact initial expenses. In addition, any new construction projects for an ASCEND COLLECTION HOTEL will be unique and tailored to the individual hotel, rather than developed according to a Choice-specified prototype.

Note 2:���� Estimates based on an 80 guestroom hotel.

Note 3:���� Once a Membership Agreement is signed, this fee is not refundable.

Note 4: Real estate costs vary considerably. Your land costs depend on land prices in your area and on the site you select. Sites in major urban centers and/or popular resort destinations are desirable.

Note 6: Statutory Workers Compensation and Employers Liability insurance with minimum Employers Liability limits of coverage as stated in the Membership Agreement.

Note 7: Opening inventory of supplies includes appropriate ASCEND COLLECTION items/brochures, linen, paper supplies and housekeeping supplies.

Note 8: You must pay the costs of travel, living and other expenses incurred by you and your employees while attending our training programs. The amount of these expenses will depend on the distance your employees must travel, the type of accommodations, the number of employees attending the training programs, and their respective wages.

Note 9: The estimate of $14,000-825,000 is based on a wired solution for the Hotel size shown and includes wiring, routers, software, server, splitters, etc. Wireless solutions could range from $7,500 - $9,500, depending upon the number of access points.

You must also arrange and pay for the Incoming Broadband Service. You may purchase this from any available source. If you obtain this service through vendors with whom we have made arrangements, we currently estimate that it will cost between $3,700 - 12,800 per year. This estimate is based on the Hotel size shown and currently includes high speed Internet Access (delivered by T-l, DSL or a Fractional T-l) and 24/7 support provided by a third party with Tier I and Tier II levels. Your costs will vary depending upon bandwidth usage and your Hotel''s size and location. (Although we have not done so, we reserve the right to require that you purchase HSIA services from a specific supplier.)

Note 10: We based these estimates on our experience with hotel franchises and discussions with hotel business people.

Note 11:��� All fees are non refundable unless otherwise stated.

Note 12: You should review these figures carefully with a business advisor before making any decision to purchase the franchise.