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Business Description

Holiday was incorporated under the name “Holiday Inns Franchising, Inc.” in Delaware on November 3, 1989. On October 20, 1997, Holiday changed its name to “Holiday Hospitality Franchising, Inc.” and on March 26, 2012 Holiday converted to a limited liability company. Except as set forth in this disclosure document, Holiday does business only under its limited liability company name. Holiday’s principal business address is Three Ravinia Drive, Suite 100, Atlanta, Georgia 30346, and its telephone number is (770) 604-2000. Holiday’s agents for service of process in the states whose franchise laws require Holiday to name a state agency as agent for service are shown on Exhibit D. Holiday also offers and grants franchises for other hotel brands. This disclosure document contains information related only to the Holiday Inn brand group of full service hotels, which includes Holiday Inn? hotels and Holiday Inn? & Suites hotels (formerly known as “Holiday Inn? Hotel & Suites” hotels), the Holiday Inn Express? brand group of limited service hotels, which includes Holiday Inn Express? hotels and Holiday Inn Express? & Suites hotels (formerly known as “Holiday Inn Express? Hotel & Suites” hotels); and Holiday Inn? Resort hotels (see below in this Item 1). Holiday also has separate disclosure documents for InterContinental® Hotels & Resorts, the Crowne Plaza® brand group of upscale hotels, resorts and suites, Hotel Indigo®, Staybridge Suites? (an extended stay hotel brand), Candlewood Suites® (an extended stay hotel brand), EVEN® Hotels and avid™ hotels.

Prior Experience

Holiday does not operate businesses of the type being franchised, but its affiliates do. Neither Holiday, its predecessors, nor any affiliate has offered franchises in any other lines of business other than those mentioned in this disclosure document. However, Holiday and its affiliates reserve the right to enter into any future business activities.

Business Offered

Holiday offers and grants franchises under the terms of a License Agreement (the “License”). The License provides for the establishment and operation of a Holiday Inn or Holiday Inn Express brand group hotel (each, a “Hotel”) under any one of the following hotel brands: Holiday Inn®, Holiday Inn® & Suites, Holiday Inn? Resort, Holiday Inn Express® and Holiday Inn Express® & Suites. The Hotel you operate will be part of a system which is appropriate for your Hotel brand (the “System”). The System is designed to provide distinctive, high quality hotel service to the public, and includes, among other things, those service marks and copyrights, trademarks and similar intellectual property rights that Holiday designates; rights to domain names and other identifications or elements used in electronic commerce made available to licensees of the System by the License; access to a reservation system operated in accordance with specifications that Holiday establishes from time to time; advertising, distribution, publicity and other marketing programs and materials; architectural drawings and architectural works, training programs and materials; confidential or proprietary information, standards, specifications and policies for construction, furnishing, operation, appearance, and guest service; programs for inspecting the hotels, measuring and assessing service, quality and consumer opinion and consulting with you; and other requirements referred to in the License, or in Holiday’s Standards for your Hotel brand (collectively, the “Standards”), and in other communications. Holiday may add elements to the System or modify or delete elements of the System. The License may include obligations for the performance of construction and renovation work specific to the property being licensed, which will be detailed in Attachment “B” to the License. You should review these obligations before signing any License.

Initial Fees

When you submit an application for a License – whether for a new development, conversion, change of ownership or re-licensing – you must pay Holiday an initial application fee (the “Application Fee”) of $500 per guest room, but not less than $50,000. See Item 6 for information relating to the requirements and fees for changes of ownership, brand conversions between brands licensed by Holiday, franchisee name changes, realignment of the franchisee’s ownership and re-licensing. In special circumstances, Holiday may grant Licenses of 60 months or less. For these Licenses, you must pay to Holiday, when you submit the application: (a) for a term of between 25 to 60 months, an Application Fee of $250 per guest room, but not less than $25,000; or (b) for a term of less than 25 months, an Application Fee of $150 per guest room, but not less than $15,000. REFUNDABILITY: If Holiday does not approve your application for a License, or if you withdraw the application before Holiday approves or denies it, Holiday will return the Application Fee to you, less $15,000 ($5,000 in the case of a License of 60 months or less). If Holiday approves the application subject to certain requirements, Holiday may revoke its approval if you fail to meet those requirements. Once Holiday approves the application (even if Holiday subsequently revokes its approval), the Application Fee is nonrefundable. PIP: Before you submit an application for a conversion, change of ownership, brand change or re-licensing, you must arrange for Holiday to conduct an inspection of the Hotel so that Holiday can prepare written specifications for the upgrading, construction and furnishing of the Hotel in accordance with the Standards, in the form of a plan called a “Property Improvement Plan” (“PIP”). There is a nonrefundable $6,500 fee for the inspection of your Hotel and the preparation of the PIP report (see also Item 6). In the case of a conversion hotel, Holiday will not authorize your Hotel to open until you complete all PIP requirements, including submission of plans before the start of construction in accordance with the dates specified in your License and the attachments to your License (see Item 11). In the event the hotel fails its opening inspection, Holiday may charge you up to $5,000 for each re-evaluation and re-inspection (see also Item 7, Note 17). Holiday Inn® Brand Group and Holiday Inn Resort® F&B Programs: All Holiday Inn brand group Hotels and Holiday Inn Resort hotels must participate in and provide the mandated food and beverage programs, as outlined within the Standards. The programs include signature menu items and specified brand name food and beverage products, approved restaurant menus, room service menus, room service pre-order menus, merchandising materials, and approved training services and manuals. SCH offers Hotels a package of merchandise, training materials and services for a set annual fee. Currently, SCH’s annual fee for the breakfast program is $2,400 plus shipping and handling, and the annual fee for the dinner and bar program is $3,000 plus shipping and handling. The fees for the first year of your License term must be paid prior to your Hotel’s opening. If your Hotel does not purchase these packages from SCH, your Hotel must obtain the required materials and services from a vendor approved by SCH, submit all items to SCH for approval, and complete an applicable waiver within IHG Merlin (see Item 11). System Hotels may receive supplier rebates negotiated by IHG Marketplace. The rebates from the manufacturers to the hotels are administered through a third party tracking company, which charges the suppliers a nominal fee for this service. Holiday Inn® Brand Group and Holiday Inn Resort® Branded F&B Concepts: SCH may make available one or more branded F&B restaurant concepts for your Hotel (see Item 8). If you desire, you may elect to open one of the approved branded F&B restaurant concepts at your Hotel; however, you will not be required to do so. If you elect to do so, you will sign the Participation Agreement attached as Exhibit I-3 and will be required to pay a fee of up to $27,500. Holiday Inn Express® Brand Group Breakfast Bar Express Start®: Before your Holiday Inn Express brand group hotel opens, Holiday will review your breakfast bar plans and assist in determining the required configuration for your Express Start equipment and signage. A typical cost for the front of house and back of house package of equipment and signage is a minimum of $30,000 plus shipping and applicable tax, however Hotels with high multiple occupancies may incur a greater cost. TRAINING, EQUIPMENT AND MATERIALS: The Hotel Openings Services & Transitions (“HOST”) program provides services and training required to open a hotel in the System, including the New Investor Orientation and Certification Program, HOLIDEX® Plus/IHG Concerto™ Ramp Up, Key Programs Training, 3-months post opening support and other on-site consultations. The HOST fee covers up to two participants per hotel. The HOST fee is $6,000, plus trainee/trainer expenses. The HOST fee covers pre-opening training, including instruction, materials and library and instructor expenses. Participants from all hotels are responsible for their own airfare, lodging, meals and other miscellaneous expenses for the program or workshop for their brand group. Additional attendees will be required to pay a separate registration fee, which will be $250 per person for the New Investor Orientation and Certification Program and $250 per person for the HOLIDEX® Plus/IHG Concerto™ Ramp Up program per additional participant. You must attend the New Investor Orientation and Certification Program before your architect begins detailed construction plans. You must pay your travel, lodging and other miscellaneous expenses. You must provide Holiday with periodic updates of your development progress, which you and Holiday will discuss at the New Investor Orientation and Certification Program. Before your architect begins detailed construction plans, you must submit preliminary plans to Holiday for Plan Review comment. Regardless of whether or not you have already attended the New Investor Orientation and Certification Program, you, your architect and general contractor must attend a Construction Consultation in Atlanta, Georgia, or other locations that Holiday may designate. There are no fees for the Construction Consultation; however, you must pay for your travel, lodging and living expenses. Your General Manager and other individuals designated as your system experts at your property must attend a four-day HOLIDEX® Plus or IHG Concerto™ workshop at SCH designated locations. No additional fees will be incurred for the HOLIDEX® Plus IHG Concerto™ workshop, but you will incur expenses for travel, meals and lodging. During the hotel opening process, you may be required to pay additional fees for pre-and post-opening training, consultation and coaching services provided by SCH or designated representatives. These additional fees associated with on-site visits by SCH will not exceed $2,500 per visit, but you must pay for the expenses of the trainers’ travel, living and lodging expenses while conducting the visit. In the event that you need to reschedule your pre-opening visit after arrangements for such visit have already been made by Holiday, you may be charged a fee of up to $2,500. Your General Manager, Front Office Manager (or equivalent) and Director of Sales must each attend an initial certification training program. The cost for the initial certification training program will range from $1,395 to $2,195 per trainee. You must pay for any travel or training expenses of your trainees. You must also purchase training materials for the training programs described in Item 11, which Holiday estimates will cost no more than $5,000 per hotel for all trainees combined. Your General Manager and Guest Experience Champion must each complete the Leading the Brand Training for New Hotels certification prior to the hotel opening. The cost for the training event, initial training materials, and subsequent consulting support is $695 for Holiday Inn brand group and Holiday Inn Resort hotels and $395 for Holiday Inn Express hotels. You may be required to purchase subsequent training materials to fulfill the ongoing training of new employees. Holiday currently designates Oracle America, Inc. as the Property Management System (“PMS”) provider and requires you to operate on the Opera or Opera Xpress PMS software (see Items 1, 5, 6, 7, 8 and 11). The estimated costs for the equipment configuration, installation, software and training will vary depending on the number of guest rooms and technology needs at your Hotel. We estimate that the cost for the PMS installation and the purchase of required hardware devices (i.e., workstations and printers) will range from $64,000 to $75,000 for a hotel with 1-100 rooms; $83,000 to $96,000 for a hotel with 101-175 rooms; $97,000 to $130,000 for a hotel with 176-250 rooms; $124,000 to $187,000 for a hotel with 251-350 rooms; and $196,000 or greater for a hotel with 351 rooms or more. For hotels which are managed by an affiliate of Holiday and have fewer than 150 rooms and six PMS workstations, a hosted PMS option is available. This hosted option is priced differently from the premise-based option which is offered to all SCH hotels. All hotels will require a custom quote at the time the deployment process begins to better determine estimated costs. You must pay these costs before any goods or services are delivered to the hotel. These cost estimates include: the basic hardware for the PMS and access to the Reservation System, the basic software, the installation of equipment and software and initial training for your employees on how to use the PMS with the Reservation System, and the purchase, installation of and training for the SPS Equipment and software. These estimated costs do not include other training, additional equipment, additional software, additional operational manuals, shipping and handling, taxes, insurance, or food, travel and lodging expenses of your employees, vendor employees, SCH employees or contractors who install the PMS and Reservation System equipment and software at your Hotel and train your employees to use them or the cost of internal hotel cabling or infrastructure. SCH requires that you refresh PMS hardware/software every 48 months. Holiday may consider requests to alter the requirements described in this Item. Holiday will only consider changes under special circumstances and any changes must comply with applicable laws.

Financing

Holiday does not offer any formal program for direct or indirect financing. Holiday, SCH or its affiliate, General Innkeeping Acceptance Corporation (“GIAC”) may furnish loans or guaranties to franchisees. Holiday, SCH and GIAC consider making loans or guaranties under terms and conditions that would be negotiated on a case by case basis with the prospective franchisee and any decision to make a loan or provide a guaranty would be made in the judgment of Holiday, SCH or GIAC alone, and conditioned upon approval of the Executive Committee and Board of Directors. It is your responsibility alone to obtain adequate financing for all expenses related to the development, opening and operation of the hotel.

Franchisee Revenue and Profit

The following charts set forth certain 2017 historic performance information for Holiday Inn Mature Hotels, Holiday Inn Express Mature Hotels and Holiday Inn Resort Mature Hotels, respectively, operating in the United States. “Mature Hotels”, as used in this Item 19, means hotels which were open two full years or longer as of December 31, 2017; were franchised or, alternatively, owned and/or managed by us or one of our affiliates; and, were not in financial or quality default of their applicable franchise or management agreement obligations as of December 31, 2017. It is important that you read the footnotes following each table as well as the “Explanation/Important Notes” section of this Item 19. As of December 31, 2017, there was a cumulative total of 2,638 Holiday Inn Hotels, Holiday Inn Express Hotels and Holiday Inn Resort Hotels in the United States, of which 512 hotels qualify as a “Mature Hotel” for the Holiday Inn brand. FOR ALL OF THESE REASONS, YOUR RESULTS ARE LIKELY TO DIFFER FROM THE PERFORMANCE RESULTS SET FORTH IN THE TABLES ABOVE. Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much. Further, you must understand that the information set forth in this Item 19 was largely derived from room rate, occupancy rate, number of available rooms and other data submitted to us by franchised and managed hotels and that we have not independently verified or audited this information. We will make available to you upon request that methodologies, data bases and assumptions utilized by us in arriving at the information contained in the tables above. Written substantiation for this financial performance representation is available upon reasonable request. However, we are under no obligation to disclose to you specific information for any particular hotel. Again, you must note that information concerning franchised and managed hotels is based on unaudited information collected and submitted by our franchisees and hotel managers, and neither we nor our affiliates have audited or otherwise independently verified this information. While the tables above show information concerning average room rates, you set your own room rates. The only information we will furnish to you regarding historic (never projected) hotel performance is that set forth in this Item 19 and in any “supplemental financial performance representation” directed to a particular location or circumstance which we may (but need not) elect to furnish separately to you. None of our officers, directors, employees or other representatives, regardless of position, is otherwise authorized to furnish to you, in writing or orally, any information regarding the historic, current, actual or potential sales, expenses, income or profits of franchised or non-franchised hotels other than the historic average information set forth above and any related supplemental financial performance representation we may elect to furnish to you. If you nevertheless receive any other such information from any individual purporting to act on our behalf, you are warned that you must not rely on it in any fashion whatsoever. Instead, we ask that you immediately contact us in writing at: Holiday Hospitality Franchising, LLC Attn: Financial Performance Representation Administrator c/o Vice President, Franchise Operations 3 Ravinia Drive – Suite 100 Atlanta, Georgia 30346