RED ROOF INN - FDD UFOC ITEM 7 Detail

YOUR ESTIMATED INITIAL INVESTMENT

I sriMXIl D r\lM NDI11 Rl S I OK VM-KOOM M \\ HI II1) 1 \C II 11 ^

444 M

<■ I SUMA-I-I-I) (-OM

Ml IIIOD-OI PAWIIiVI-

I Will N ,
¹������������ l>( I

IO-W-IIOM P-A*\ll M IX 1<) 111 MADI

Market Study (Note 1)

$04e $7,000

Lump Sum

Before submitting Application

Consultants

Initial Franchise F��

(Note 2)

$30,000

Lump Sum

$3,000 with your Application and

the balance upon

execution of the

Franchise

Agreement

Phase I

Environmental Survey (Note 3)

SXL-ta

$6,000

Lump Sum

Before signing commitment for land acquisition

Consultants

Design, Testing &

Fe�s

(Note 4)

$60,000 to

$85,000

As Arranged

Prior to Opening

Architects, Engineers, Local

Municipalities and other Vendors

Land Acquisition

(Note 5)

(Note 5)

(Note 5)

(Note 5)

Site and Civil Work (Note 6)

$185,000 to $220,000

Prior to Opening

Contraotors/V endors

Faoility Construction (Note 7)

$1,917,000 to $2,270,000

Lump Sum

Prior to Opening

Contractors, Subcontractors, Construction Managers and Vendors

Construction Contingency (Note 8)

$0-te $85,200

Lump Sum

Prior to Opening

Contractors/V endors

Furniture, Fixtures and Equipment (Note 9)

$175,000 to $550,000

Lump Sum

Prior to Opening

Vendors

Telephone and Computer Systems (Note 10)

$30,000 to $40,000

Lump Sum

Prior to Opening

Installers/V endors/ ANA Purchasing llfllH

GQ&T

MET HOD OF , PAYMFNT

WHEN v

1)1 I

PAYMENJ^ISgrO?

Signage (Note 11) $45,000 to $75,000

Lump Sum

Prior to Opening

Installers/Vendors

Opening Inventory and Supplies (Note 12)

$25,500 to $30,700

Lump Sum

As Arranged

Vendors

Insurance (Note 13) $13,800 to $17,250

Lump Sum

Prior to Opening

Insurers

Utility Deposits (Note 14) $10,000 to $30,000

Lump Sum

Prior to Opening

Utility Companies

Training Expenses (Note 15)

$ 2,300 to $ 5,000

Lump Sum

Prior to Opening

Vendors

Software License Fees, Installation and Training (Note 16)

$ 7,000 to $10,000

Lump Sum

Prior to Opening

Vendors

Additional Funds

3 months (Note 17)

$90,000 to $125,000

As Arranged

As Incurred

Vendors/Employees

TOTAL

(excludes land acquisition costs) (Note 18)

$2,970,600 to $3,586,150

Royalty

4.5% of Gross Room Revenues, as defined in the Franchise Agreement

Pavable on the 20th day of each month on the Gross Room Revenues for the previous month

Currently, we rebate to vou an
amount up to 1/2% of the
vour Gross Room Revenues
for a calendar year if vour Red
Roof Inn exceeds our written
standards for that period and
you are not in default of the
Franchise Agreement. The
rebate is paid to vou 90 days
following the end of the
calendar year. We determine
whether your Inn has
achieved superior results for
the relevant period bv using a
guest satisfaction tracking
system. This program is_________

Notes:

These estimates are for a newly constructed Red Roof Inn with 71 rooms._ If you convert an existing facility to a Red Roof Inn, you will incur costs to bring the property into conformity with the System. Such costs vary in each individual situation based on the physical condition of the property, fixtures, equipment, furnishings, furniture, signage, and similar items already present on the property. These estimates do not include any payments which mav be due to us under a Renovation Assistance Agreement. We onlv require Renovation Assistance Agreements in rare circumstances. If we require a Renovation Assistance Agreement, or if vou request one, the fees for such services vary widely, typically between $5.000 and $30.000. depending on the services included.

1.                  A market study is optional._ The purpose of a market study is to gauge demand, rate potential, appropriateness of the location and other aspects of the proposed project. We do not require a market study or recommend any particular consultant, but we recommend a market study. _Your lender may require a market study as a condition to financing.

2.                  See Item 5 for the conditions when the Application Feethis fee is refundable. The Initial Franchise Fee is not refundable. We do not finance any portion of the Application Fee or Initial Franchise Fee.initial franchise foe. Currently, existing franchisees may purchase additional franchises at a reduced Initial Franchise Feefranchise fee of $25.000. in addition to the $3.000 Application Fee.$28.000.

3.                  We do not require proof that your intended site is environmentally appropriate._ However, we recommend that you undertake an environmental study and your lender may make an environmental study a condition to financing.

4.                  This estimate is for architectural services, civil engineers, permits, fees, and testing both before and during construction. You should discuss with your consultants? and obtain renovation or construction plans? that meet the Americans with Disabilities Act and other legal requirements.

5.                  We do not estimate the cost of real estate due to wide variations among geographic areas and at different sites. .The typical Red Roof Inn requires approximately 2 acres of land.

6.                 This includes site preparation, grading, earthwork, paving, surfacing, site utilities, landscaping and irrigation for a typical site (that does not have difficult or peculiar land use, design, and/or grading aspects).

7.                 This includes the cost of design and installation of landscaping and irrigation suitable to the site-Costs will vary depending on the site and local codes.

8.                 This estimate is based on RRTs previous experience in building Red Roof Inns and estimates based on the design and development of a new prototype in 2007. It includes construction costs for one buildings This estimate assumes that you do not construct a manager''s apartment (approximately $10,000 extra) or a swimming pool (approximately $35,000 extra), but includes construction of an on-site laundry at ah approximate cost of $17,000._ We recommend a laundry facility unless suitable alternate facilities are available.

9.                 The construction contingency is for unforeseen costs and difficulties when constructing your Inn.

10.              This amount includes the cost for Owner supervision of the construction process.

11.              This includes equipment such as TVs, furniture, carpet and fixtures for guest rooms, lobbies, common areas and back-of-house areas. It includes the required lobby coffee machine and presentation. It does not include taxes or freight, nor does it include furnishing a manager''s apartment.

12.              You will need a voice telephone system and oomputer system to provide telephone service to3upport the front desk, back office, and guest rooms. The cost of such systems varies widely by geographic arearequired software and vendor.

13.              You will need a Computer System and data communication capability to allow you to manage your business and access the Reservation sSystem.. This estimate is for 2 front desk workstations plus the manager''s back office computer, initial data communications hardware cost, initial sublicense fee of $3.650 pavable to us for the Fidelio Property Management System software, and initial costs of licenses for other miscellaneous software necessary to operate the computers and the Property Management System. It includes installation cost. During 2008 and 2009. we will be replacing the Fidelio property management system and the data communication requirements-computer. See Items 8 and 11 for more information regarding the Computer System and data communication capability requirements.

14.              You are required to provide WiFi services to guests. If T-Mobile does not establish a Hotspot� at vour Inn, vou will be required to install a WiFi system that meets Red Roof Inn standards. This is the estimated cost of installing such a system.r

15.              We recommend the largest exterior pole-mounted or pylon sign that local authorities will allow. This estimate includes building signage and smaller directional signage.

16.               You must purchase linens and towels, forms, uniforms, collateral materials and cleaning supplies.

17.               The figures represent an estimated payment of one year''s insurance premiums in advance, with coverage meeting the insurance requirements of the Franchise Agreement. Insurance costs vary widely depending on location, prior business history, size of the Inn, prior loss experience. You should obtain a quote from vour insurance company for the required coverage.cost of $200 to $250 per room, per year, with coverage of up to $5,000,000, and a deductible not to exceed $5000. Insurance requirements are summarized as follows:

Commercial Property Insurance Commercial General and 90% of the replacement value of your Inn $5,000,000 per occurrence

Umbrella Insurance

Automobile Liability Dram Shop/Liquor Liability

Workers'' Compensation

$1,000,000 per occurrence

$5,000,000 per occurrence (required only if you serve alcohol at your Inn) $500,000 per occurrence

18.               Utility costs vary widely. You should check with your local utility companies.

19.               This estimate includes the following amounts pavble to us:a $500 charge for the initial training of 1 Owner^-and-a charge of $1.200 to $1.800 for the initial training of 1 Manager, which may be the same person; and $3.000 plus expenses of $500 to $1.000 for the initial onsite training and opening assistance provided bv us. In addition to this cost, vou are responsible forporson. It also includes meals, wages, and travel expenses of the attendee while attending training in Columbus, Ohio, which we estimate at $1.500 to $2.000.7 See Item 11 for more information on the training program.

44t------ This estimate includes a $3,650 Software license fee and a $3,000 charge for the computer

training.-

20.               This estimates your additional initial start up expenses for a three month period. - These expenses include payroll costs._ These figures are estimates and we cannot guarantee that you will not have additional expenses starting the business. _Your costs will depend on factors such as: how much you follow our methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for our services:product: the prevailing wage rate; competition; and the occupancy level reached during the initial period.

21.               These estimates were preparedPrepared by relying on our own experience and, in part, on information from our predecessorsAeeef based on RPJ''s experience in building Red Roof Inns., when it was an indirect affiliate of Acoor. You should review these figures carefully with a business advisor before making any decision to purchase the franchise. .Except as otherwise described above, all payments are non-refundable.. We do not offer financing for any part of your initial investment.