$82

Business Description

The franchisor is Red Roof Franchising, LLC, (“RRF”), a Delaware limited liability company with a principal business address of 605 South Front Street, Columbus, Ohio 43215. RRF was formed in January 2007. In June 2007, RRF acquired all the rights to franchise Red Roof Inns and assumed as franchisor all existing Red Roof franchise agreements from G6 Hospitality, LLC (f/k/a Accor Franchising North America, LLC); our immediate predecessor. In addition, RRF sublicenses the Property Management System software used in the Red Roof Inn System to our franchisees. RRF does business under the names Red Roof Franchising, Red Roof Inn, Red Roof Inn and Suites, Red Roof PLUS+ and Red Roof PLUS+ and Suites. RRF offers franchises under the names Red Roof Inn, Red Roof Inn & Suites, Red Roof PLUS+ and Red Roof PLUS+ & Suites. It has offered franchises under the Red Roof Inn® and Red Roof Inn & Suites® brands since September 2007 and it has offered franchises under the names Red Roof PLUS+ and Red Roof PLUS+ & Suitessince January 2014. RRF has never offered franchises under any other brands, although the franchise agreements do not prohibit us from doing so. RRF does not own or operate any Red Roof Inn, Red Roof Inn & Suites®, Red Roof PLUS+ and Red Roof PLUS+ & Suites locations. RRF is not engaged in other business activities.

Prior Experience

The parent company of RRF is RRF Holding Company, LLC (“RRF Holding”), a Delaware limited liability company having a principal business address of 605 South Front Street, Columbus, Ohio 43215. RRF Holding does not offer franchises in any line of business and does not provide any services directly to franchisees. The parent company of RRF Holding is Red Roof Inns, Inc. (“RRI”), a Delaware corporation having a principal business address of 605 South Front Street, Columbus, Ohio 43215. RRI, through various subsidiaries, owns and/or operates Red Roof Inn® locations. RRI does not now offer franchises in any line of business; however, it previously offered Red Roof Inn and Red Roof Inn & Suites franchises. RRI Financial, Inc. sublicenses the Red Roof Inn trademarks to us for the purpose of granting Red Roof Inn franchises. RRI does not provide any services directly to franchisees. The Red Roof Inn System has been continuously operated since 1972. Red Roof Inn franchises have been offered since August 1996 by us or our predecessors, as described under “Predecessors” above. Prior to 2011, approximately sixty percent (60%) of Red Roof Inns were owned by wholly owned subsidiaries of RRI (the “Former Company Owned Inns”). In 2011, RRI underwent a restructuring of its debt, in which all but eleven (11) of the Former Company Owned Inns were transferred to two (2) third parties: Dune Real Estate Partners (“Dune”) or Five Mile Capital (“Five Mile”). In May 2015, Five Mile sold its remaining interest in all but one of the remaining Former Company Owned Inns to Bestford Capital (“Bestford”), subsequently in June 2016 Five Mile sold its last remaining Former Company Owned Inn to an affiliate of RRI. Although transferred to third parties, the Former Company Owned Inns continue to operate as Red Roof Inn hotels pursuant to Red Roof Inn franchise agreements and, as a result, all Red Roof Inn hotels are franchisees. Currently, RRI West manages all properties owned by Dune and Bestford as well as other third party entities. Therefore, although all Red Roof Inn hotels operate pursuant to the terms of a Red Roof Inn franchise agreement and are therefore franchisees, they fall into three categories: (1) franchisees owned and operated by third parties, (2) franchisees owned by third parties but managed by an RRI affiliate (RRI West) (“Affiliate Managed Franchisees”), or (3) franchisees owned and operated by affiliates of RRI (“Affiliate Owned Franchisees”) (all of which are collectively defined herein as “franchisees” unless otherwise noted). As of December 31, 2017, there were 534 franchised Red Roof Inns (113 of which are Affiliate Managed Franchisees and 13 of which are Affiliate Owned Franchisees).

Business Offered

If you are approved as a Red Roof Inn hotel (all references herein to Red Roof Inns include Red Roof Inn & Suites, Red Roof PLUS+ and Red Roof PLUS+ & Suites Hotels), you will be granted the right to construct or convert and operate a Red Roof Inn hotel at a single, defined location through a Franchise Agreement (as defined herein). We offer franchises to both new operators who will build new hotels at a defined location (a “New Build”) and to existing hotel operators, who will convert their existing hotel and renovate such hotel in accordance with our standards (“Standards”) and as otherwise required for conversion (a “Conversion”). For purposes of this document, all information herein applies to both New Builds and Conversions unless otherwise noted. You will own and operate a Red Roof Inn, Red Roof Inn & Suites, Red Roof PLUS or Red Roof PLUS+ & Suites lodging facility. A Red Roof Inn lodging facility offers low cost accommodations to all sectors of the traveling public. A Red Roof Inn is generally located at places that attract both business and leisure travelers, such as major highway exit ramps, major intersections, airports, tourist destinations, and business centers. You will operate the business according to our business system and standards, and under the Red Roof Inn trademarks. You will use our prototype architectural plans and drawings in building a Red Roof Inn, or in renovating an existing building to be a Red Roof Inn. A typical Red Roof Inn does not offer full service and management intensive facilities or services, such as inhouse restaurants or cocktail lounges, conference rooms, room service, or banquet centers. However, to meet the needs of guests in certain markets, we offer a Red Roof Inn & Suites lodging facility with enhanced amenities, such as more spacious rooms with refrigerators and coffee makers, exercise facilities, or meeting rooms. We also offer Red Roof PLUS+ and Red Roof PLUS+ & Suites lodging facilities for those hotels that meet Red Roof PLUS+ standards and service requirements. Red Roof PLUS+ and Red Roof PLUS+ & Suites lodging facilities offer enhanced amenities such as a minimum required number of premium guest rooms as well as other amenities and service requirements and was designed in response to continuing guest demand for an enhanced experience at a value price, positioned to compete in markets attracting experienced business and leisure travelers accustomed to midscale and above accommodations. Candidates for Red Roof PLUS+ and Reds Roof PLUS+ & Suites properties will be considered based on criteria including, but not limited to, an applicant’s experience and history in addressing guest satisfaction, proven guest service acumen, past property operating success as well as market qualifications (which may, but are not required to, include the following: a market with midscale as well as limited service competition, a market with appeal to business and leisure travelers, middle to upper middle class, key business demand generators present, i.e.: convention center, university, business parks, hospitals, government centers and the potential to support strong average daily rates.) Property qualifications for Red Roof PLUS+ and Red Roof PLUS+ and Suites include but are not limited to compliance with all Red Roof PLUS+ specifications for both new construction or conversion locations and a commitment to elevated product and service standards. A franchisee operating a Red Roof PLUS+ or Red Roof PLUS+ and Suites property must understand the continuous nature of upgrading their Red Roof PLUS+ or Red Roof PLUS+ & Suites Property as outlined in the Red Roof Brand Standard Manual (the “Manual”). If you apply for a Red Roof franchise agreement and intend to build a new hotel, you must sign the Non-Disclosure Agreement attached as Exhibit G, in which you agree to keep confidential all information concerning the building plans and related material for our new build NextGen® prototype. Your use of certain Red Roof Inn trademarks in connection with your Red Roof Inn business will be pursuant to a sublicense from us to you under the Franchise Agreement. One of our subsidiaries, RRI Financial, Inc., is the owner of the Red Roof Inn trademarks. It licenses to us the right to use the trademarks and grant franchisees the right to use them. The business address of RRI Financial, Inc. is 605 South Front Street, Columbus, Ohio 43215. See Item 13 of this Disclosure Document for further discussion of the trademarks and the licensing arrangements.

Initial Fees

Application Fee When you submit an Application, you must pay us an Application Fee of $3,000. If we reject your Application, we will refund your Application Fee if we or our representatives have not visited your site or the area surrounding your site in connection with your Application, or provided you with written architectural drawings or technical information. There are no other refunds of the Application Fee under any circumstances. Initial Franchise Fee All new franchisees pay a lump sum initial franchise fee when they sign the Franchise Agreement in the amount of $27,000. Once the initial franchise fee is paid, there are no refunds under any circumstances. This amount is in addition to the Application Fee. Training Fees Before your Inn opens, you or your Manager must attend RED Advantage Training and pay a fee for such training in the amount of $2,000. Additionally, a field trainer will visit your Inn the week before or the week of your opening and provide additional training for a fee of $3,000 plus trainer’s travel expenses (see Items 7 and 11 for more information regarding the training programs). In addition to these training fees, you are responsible for all meals, wages, and travel expenses of those persons attending RED Advantage Training and the wages for all of your employees which participate in the onsite training. You must pay the training fees in one lump sum before such training. None of these fees are refundable under any circumstances. Property Management System and Computer Fees You must use Red Roof Inn’s RediStay® Property Management System (“PMS”) and use computer systems that support such PMS and otherwise meet our standards and specifications. Of the fees associated with the PMS and computer system, you must pay us a software license fee for your use of the PMS in the amount of $15,000. To the extent you do not already have such items, you will also be required to purchase computer hardware and software that supports the PMS and otherwise meets our standards and specifications (See Items 7 and 11). You are not required to purchase such hardware and software from us but may do so. All such computer related costs are payable in a lump sum prior to opening and are not refundable under any circumstances. In addition, you will be required to purchase a smart card credit card terminal (Ingenico iSC480 or other such device as designated by Red Roof) and a bar code scanner (Motorola DS4208 or other such device as designated by Red Roof) at a cost that ranges between $1,500 and $3,000 per set. Re-Visit Fee If you notify us that your Inn is ready for opening and our personnel visit your Inn and we determine that your Inn has not satisfied all requirements to open as a Red Roof Inn, you must pay a re-visit fee of $2,500 before we approve your opening. The re-visit fee is not refundable under any circumstances.

Financing

NONE.

Franchisee Revenue and Profit

This Item contains information regarding the average performance figures for selected Red Roof Inn hotels, including Average Daily Rate, Average Occupancy Rate, Revenue per Available Room (“RevPAR”) and Brand Contribution. The averages below are based on performance information for all Red Roof Inn locations open and operating for at least two (2) years and for the entire period of January 1, 2017 through December 31, 2017. There were 412 total Red Roof Inns which met these criteria (the “Properties”). In addition to these Inns, during 2017, there were 122 Red Roof Inns which were not open throughout the entire year or were not in operation at least two (2) years. Average Daily Rate: $63.64 Of the 412 Red Roof Inns which meet the criteria, 154 or 37.4%, of the Properties achieved or surpassed this Average Daily Rate. Average Daily Rate is calculated by dividing the total number of room revenue for the Properties by the total number of occupied rooms for the Properties. Average Occupancy Rate: 63.2% Of the 412 Red Roof Inns which meet the criteria, 194 or 47.1%, of the Properties achieved or surpassed this Average Occupancy Rate. Average Occupancy is calculated by dividing the number of occupied rooms in the Properties for the applicable period by the total number of available rooms in the Properties for the same period. Revenue per Available Room: $40.19 Of the 412 Red Roof Inns which meet the criteria, 187 or 45.4%, of the Properties achieved or surpassed this Revenue per Available Room. Revenue per Available Room is the average amount of revenue generated per day from each available room in the Properties, and is calculated by multiplying the Average Daily Rate by the Average Occupancy. Brand Contribution: 67% Of the 412 Red Roof Inns which meet the criteria, 165 or 40%, of the Properties achieved or surpassed this Brand Contribution. The Brand Contribution is the percentage of room revenue generated for the Properties, the reservations for which were generated by the Red Roof Inn website, the Red Roof call center, group booking, National Sales, Global Distribution System (“GDS”), third party websites and reservations by RediCard members booked directly with the Properties. This is calculated by dividing the total room revenue generated by the channels referenced above for the Properties by the total room revenue generated by all occupied rooms at the Properties. Renovated Properties The following chart sets forth the Average Occupancy Rate, Average Daily Room Rate and RevPAR for Red Roof Affiliate Managed and Affiliate Owned hotels that have implemented the NextGen renovations standards. These locations were open and operating for at least two full years, started renovations in 2011 or later and have completed renovations for the entire period of January 1, 2017 through December 31, 2017. Additional Renovation Information The following information is based on historical results for 113 Red Roof Affiliate Managed hotels. All of the inns in each of the two portfolios; Dune and Orchard; were renovated as of December 31, 2014. The chart below shows the RevPAR for the Dune and Orchard portfolios relative to the Tract Scale, as reported by Smith Travel.