$251

Business Description

We do business under the following primary Choice Hotels trademarks among others: COMFORT INN®, COMFORT INN & SUITES®, COMFORT SUITES®, CAMBRIA®, QUALITY INN®, QUALITY INN & SUITES®, QUALITY SUITES®, QUALITY HOTEL®, QUALITY RESORT®, CLARION HOTEL®, CLARION INN®, CLARION INN & SUITES®, CLARION SUITES®, CLARION RESORT®, CLARION COLLECTION®, CLARION POINTE™, SLEEP INN®, SLEEP INN & SUITES®, RODEWAY INN®, RODEWAY INN & SUITES®, ECONO LODGE®, ECONO LODGE INN & SUITES®, MAINSTAY SUITES®, SUBURBAN EXTENDED STAY HOTEL®, SUBURBAN LODGE®, ASCEND RESORT COLLECTION®, ASCEND HOTEL COLLECTION® and WOODSPRING SUITES®. Our principal business address is 1 Choice Hotels Circle, Suite 400, Rockville, Maryland 20850. Our agents for service of process are disclosed in Exhibit B of this disclosure document.

Prior Experience

We are a Delaware corporation formed on January 8, 1963, 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 name has been Choice Hotels International, Inc. since October 15, 1997. 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 overall Choice franchise system of hotels through the development of additional hotel brands and expansion into new markets. In 2013, we established a subsidiary, SkyTouch Solutions, LLC, that develops and markets cloudbased technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers who do not have franchise agreements with us. In 2012 Room Key was founded by a joint venture of hotel companies, including us. Room Key is an online hotel search engine that offers travelers a broad network of hotel inventory while maintaining the continuity of booking directly with the hotel company. Choice Privileges Loyalty Services, LLC is a Delaware limited liability company formed on June 12, 2017 (“CPLS”). CPLS owns, operates and administers the Choice Privileges® guest rewards program. Its principal business address is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. Except as set forth in this Item 1, we do not have any other parents, predecessors or affiliates that must be disclosed.

Business Offered

We have franchised full service, mid-scale hotels under the trademark QUALITY INN since 1968. QUALITY INN, the nation’s oldest hotel brand, provides a warm atmosphere and personal, helpful service, including breakfast, in-room coffee and free high-speed internet access. We offer QUALITY branded hotels (“QUALITY hotels”) under the following trademarks: • QUALITY INN – typically a mid-scale, multi-story hotel with at least 80 rooms offering the standard amenities available to QUALITY branded hotels; • QUALITY INN & SUITES – a QUALITY branded hotel with at least 80 rooms, at least 20% of which are fully divided 2-room suites; • QUALITY SUITES – an all-suites QUALITY branded hotel with a cooked-to-order breakfast and manager’s reception included in the room rate; • QUALITY HOTEL – typically a multi-story hotel with at least 80 rooms offering a fullservice restaurant and meeting space; and • QUALITY RESORT – a QUALITY branded hotel in a resort or “destination” location. Neither we, nor any current affiliate or predecessor, has owned or operated a QUALITY branded hotel. Sunburst Hospitality Corporation, which was our affiliate until October 15, 1997, has owned and operated QUALITY branded hotels. Your receipt of this disclosure document does not mean that you will be approved as a franchisee or that you may develop or open any of our franchised hotels. Before you may develop and open any of our franchised hotels, 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 Franchise Agreement (Exhibit D), and you must pay the affiliation fee. You should not acquire any interest in a site for a hotel franchise until, at the earliest, you are approved by us as a franchisee.

Initial Fees

AFFILIATION FEE You must pay us, for the rights granted to you in the QUALITY INN, QUALITY INN & SUITES, QUALITY HOTEL, QUALITY RESORT or QUALITY SUITES franchise agreement, an affiliation fee of $300 per room for new construction with a $35,000 minimum for new franchises; $550 per room for transfers and renewals, with a $45,000 minimum for transfers and renewals. The entire affiliation fee is due at the time you sign the franchise agreement and is non-refundable following our signing of the franchise agreement. If for any reason we do not grant you a franchise, or a franchise agreement is not countersigned by us, the affiliation fee, less a $2,500 application fee, will be refunded. Financing information is in Item 10. In the past, we have agreed to reduce the affiliation fee in certain circumstances for multiple unit franchisees, franchisees with larger properties, franchisees with whom we have previously dealt, franchisees that are departing other hotel chains or franchised systems and joining our system, and franchisees in other special circumstances. However, we do not always negotiate the affiliation fee even for franchisees possessing these characteristics, and we may freely choose not to negotiate with you, even if you possess some or all of these characteristics. During the 12 months ending December 31, 2018, the affiliation fees ranged from $0 to $51,000 for new QUALITY INN, QUALITY INN & SUITES, QUALITY HOTEL, QUALITY RESORT, and QUALITY SUITES franchise agreements. EXTENSION FEE If you do not begin construction within 12 months after both you and we sign the franchise agreement or if you do not complete renovations to an existing franchised hotel within the time required under your franchise agreement, you may apply for an additional 3 months in which to begin construction or completed renovations. If we agree to grant an extension, you must pay us an additional $5,000 per extension. In special circumstances we may waive the extension fee, but we are not obligated to, and any decision to waive an extension fee will be determined solely by us. PROPERTY MANAGEMENT SYSTEM You are required to install, maintain, and use full functionality of the choiceADVANTAGE® property management and reservation system as specified by us. You must purchase from us, an initial software license to use choiceADVANTAGE. The software license includes up to three interfaces to choiceADVANTAGE and you may install additional optional interfaces to choiceADVANTAGE for an additional fee. You will receive implementation services for choiceADVANTAGE at your hotel and your General Manager, sales, marketing and front office staff must attend this training. The fees for the software license and the choiceADVANTAGE systems training and project management is between $10,750 and $14,750 depending on the size of the hotel and whether you install additional optional interfaces to choiceADVANTAGE. The initial software license and implementation fees do not include the monthly choiceADVANTAGE support fee to cover ongoing remote software support (see Item 6). There will be a rescheduling fee of between $500 and $2,100 if you need to reschedule implementation or if implementation is not completed due to circumstances that are within your control. When a franchised hotel undergoes a 50% or greater change in its ownership and the new owners sign a franchise agreement with Choice (known as a “re-licensing”), the hotel is also required to have a customized re-licensing training. This session is delivered remotely via webinar by a Choice University Learning Facilitator. The fee for the re-licensing training is $500. For re-licensed hotels that prefer a Choice University Learning Facilitator on-site, a 2day option is available for $2,600 ORIENTATION / HOSPITALITY TRAINING We provide required training programs that you, your General Manager, or other key employees must complete before opening your hotel in the Choice franchise system. The total training fees you must pay for orientation and hospitality operations training is between $0 and $3,145per person, plus travel, lodging and meals for you and your General Manager. Training consists of a 2.5-day Choice onboarding program at our headquarters in Maryland, as well as an online operator certification program that is offered virtually. Some or all of the training may not be required if you have previously owned a Choice branded hotel, obtained Choice Hotels training certification for another existing hotel and/or a hotel staff member has previously completed the training in a prior position. Attendance is mandatory at the training programs identified in this Item 5. Failure to attend within the prescribed time frame may result in formal default, and failure to cure the default could result in the termination of your franchise agreement. For more detailed information on each training program, see Item 11. *** Except as identified in this Item 5, the affiliation fee, extension fee, property management system fees and training fees are uniform, are fully earned by us when paid by you, and we have no obligation to refund these fees. Except as set forth in Item 10, we do not offer financing for any part of the affiliation fee, and we do not offer financing for any other initial fees paid to us.

Financing

AFFILIATION FEE PROMISSORY NOTE In our sole discretion and on approval of your credit, we may offer to finance the affiliation fee without interest. In that event, you must sign a promissory note (see Exhibit H). Note payment is due in one full lump sum generally within three months after the note is signed. The note may be accelerated upon default and provides for a waiver of presentment, demand for payment, notice of dishonor, protest, and includes a confession of judgment clause. Personal guarantees may be required. The note contains no prepayment penalty. DIVERSITY AND VETERAN INCENTIVE PROGRAM We participate in the International Franchise Association’s Veteran’s Transition Franchise Initiative (known as VetFran®). We are currently offering a diversity and veteran incentive program to encourage and increase the diversity of our franchise system and the hospitality industry as well as to encourage entrepreneurs that have served in the United States military and been honorably discharged from service (“Diversity and Veteran Incentive”). The Diversity and Veteran Incentive Program is intended to attract top hotel developers from diverse backgrounds and involves our commitment of capital to incentivize qualifying franchisees to develop either a newly constructed Choice-branded hotel or convert an existing hotel to a Choice-branded hotel. Qualifying franchisees who enter into franchise agreements to re-license Choice branded hotels that are currently part of the Choice franchise system are not eligible to receive a Diversity and Veteran Incentive; however these franchisees will be given a 50% discount on the then-current affiliation fee due in connection with the re-licensed franchise agreement (see below). Qualifications To qualify for the Diversity and Veteran Incentive Program, you must meet all of the following conditions: you must request the Diversity and Veteran Incentive at the time of application; you must meet our then-current qualifications for new franchisees (including our standard credit review); you must own the hotel; if you are an individual, you must identify to us the characteristics and background that will contribute to the diversity of our franchise system and the hospitality industry or if you are veteran you must demonstrate that you have served in the United States military and have been honorably discharged from service; or if you are a legal entity, you must be at least 51% legally and beneficially owned by persons that can demonstrate to us characteristics and background that will contribute to the diversity of our franchise system and the hospitality industry or meet the requirements of a veteran stated above. The Diversity and Veteran Incentive Program may not be combined with any other incentive program that we may be offering at the time of your application and we may discontinue the Diversity and Veteran Incentive Program at any time. Incentive Each Diversity and Veteran Incentive we make for a hotel using a QUALITY Mark listed in Item 13 will be for $1,500 per room in the hotel (maximum of $125,000). Each incentive will be evidenced by a 10-year forgivable promissory note (see Exhibit I) (the “Note”). We will pay the proceeds of the Note to you only after the Opening Date of your hotel. You may use the proceeds of the Note for any purpose related to the hotel. We do not require collateral for this Note, but may require personal guaranties. Forgiveness of the Note will be amortized over 10 years (beginning on the Opening Date of your hotel) using a straight-line method, so that the Note will be completely forgiven if you do not commit certain defaults under the Note beginning upon signing of the franchise agreement and ending 10 years after the Opening Date. The Note is structured to provide for one payment at the end of 10 years; however, you do not have to make payments on the Note if you remain in good standing under your franchise agreement. If you default in the obligations of your franchise agreement, your franchise agreement is terminated or expires, you die or you file for bankruptcy, then the entire remaining unforgiven principal balance is immediately due along with interest (accruing on the remaining unforgiven balance only) from the original date of the Note at an interest rate of prime plus 2%. The maximum interest rate in California is 10% annually. Under the Note, you must waive demand, presentment for payment, protest, notice of dishonor and your right to a jury trial. On your default, you also must pay all reasonable expenses, costs and attorneys’ fees that we incur in collecting the Note. The Note contains no pre-payment penalty. If you qualify for a Diversity and Veteran Incentive, you may request amortization over 5 years instead (beginning on the Opening Date of your hotel) using a straight-line method, so that the Note will be completely forgiven if you do not commit certain defaults under your franchise agreement beginning upon signing of the franchise agreement and ending 5 years after the Opening Date. If you request a 5 year Note, the incentive will be 50% of the amount of the 10 year Note, and will be limited to a maximum of $62,500. Each incentive will be evidenced by a 5 year Note in the same form attached as Exhibit I. The Note is structured to provide for one payment at the end of 5 years; however, you do not have to make payments on the Note if you remain in good standing under your franchise agreement. If you default in the obligations of your franchise agreement, your franchise agreement is terminated or expires, you die or you file for bankruptcy, then the entire remaining unforgiven principal balance is immediately due along with interest (accruing on the remaining unforgiven balance only) from the original date of the Note at an interest rate of prime plus 2%. The maximum interest rate in California is 10% annually. Under the Note, you must waive demand, presentment for payment, protest, notice of dishonor and your right to a jury trial. On your default, you also must pay all reasonable expenses, costs and attorneys’ fees that we incur in collecting the Note. The Note contains no pre-payment penalty. Termination Rights In addition, unless you have signed a 5 year promissory note, you and we must agree to waive our right to terminate the franchise agreement, without cause, on the 5th anniversary of the Opening Date. DIVERSITY AND VETERAN RE-LICENSING INCENTIVE If you: (1) qualify for the Diversity and Veteran Incentive Program; and (2) purchase a hotel that is a QUALITY branded hotel operating as part of the Choice franchise system at the time of purchase; and (3) enter into a franchise agreement with Choice to re-license the hotel as a QUALITY branded hotel, you will be granted a 50% discount on the then-current affiliation fee due in connection with your franchise agreement. Franchisees that enter into franchise agreements with Choice for the re-licensing of an existing Choice brand hotel and qualify and accept the Diversity and Veteran Incentive are not eligible to participate in any other incentive program. PMC COMMERCIAL TRUST We have entered into a non-exclusive Qualified Vendor agreement with a third party named PMC Commercial Trust (previously known as PMC Capital, Inc.) (“PMC”), which is a company authorized to provide loans. Under this agreement, PMC may offer conventional and Small Business Administration (“SBA”) financing to those of our franchisees that qualify and choose to use PMC to finance some of the following costs: affiliation fee, site acquisition, construction or remodeling, equipment and/or fixtures, opening inventory or supplies, ongoing inventory or supplies, replacement of equipment or fixtures, and other continuing expenses. These loans are generally for up to 70% to 85% of the value of the collateral and range from $500,000 to $5,000,000 for acquisitions, refinances and construction/permanent loans. Interest rates are generally variable and are at PMC’s discretion. You are not required to use PMC as your lender. If you choose to use PMC as your lender, you must enter into agreements with PMC, substantially in the form attached as Exhibit J or as PMC may otherwise require depending on your specific loan. The loan will be for up to 25 years and will require monthly payments, with the amount of the payments based on the terms agreed upon. You must grant a first lien on land and building, a first lien on furniture, fixtures and equipment and, if necessary, a lien on your personal assets. PMC will require that you personally guarantee the loan. The loans can be pre-paid but there may be a pre-payment penalty. If you default on the note, the entire remaining principal balance becomes due and the lender may have the right to take possession of the collateral and/or sell or lease the collateral. You must waive your rights to presentment for payment, demand, protest, notice of non-payment or dishonor, notices of protest and all other demands or notices. On default, the note will bear interest at the maximum rate permitted by applicable law. You must also pay PMC all the costs of collection or costs of exercising its remedies, including attorneys’ fees. You must waive your right to object to jurisdiction in the courts of Dallas, Texas as the venue for the resolution of disputes and must waive your right to a trial by jury. See the sample documents in Exhibit J for PMC’s additional rights and remedies. In consideration of Choice’s agreement to grant PMC access to our marketing channels, Choice will receive from PMC a flat payment annually. BALBOA CAPITAL CORPORATION We have entered into a non-exclusive Qualified Vendor agreement with a third party named Balboa Capital Corporation (“Balboa”), which is a company authorized to provide loans. Under this agreement, Balboa may offer conventional and lease financing to those of our franchisees that qualify and choose to use Balboa to finance some of the following costs: affiliation fee, costs to meet brand standards, property improvement or remodeling, equipment and/or fixtures, replacement of equipment or fixtures, and other continuing expenses. These loans are generally available for up to 100% of the value of the collateral and generally range from $5,000 to $1,000,000. Interest rates are fixed and are determined at Balboa’s discretion in accordance with its standard underwriting practices. You are not required to use Balboa as your lender. If you choose to use Balboa as your lender, you must enter into one or more agreements with Balboa, substantially in the form attached as Exhibit J or as Balboa may otherwise require depending on your specific financing agreement. The financing agreement will be for between 24 to 84 months and will require monthly or quarterly installment payments, with the amount of the payments based on the terms agreed upon. You must grant a first lien on the financed equipment and, if applicable, a security interest and lien on the land or building. Balboa may require that you personally guarantee the financing agreement. The financing agreement can be pre-paid and there is no pre-payment penalty. If you default on the financing agreement, the entire remaining balance becomes due and Balboa may have the right to take possession of the collateral and/or sell or lease the collateral. You must waive your rights to presentment for payment, demand, protest, notice of non-payment or dishonor, notices of protest and all other demands or notices. On default, the loan will bear interest at the rate set forth in the loan agreement. You must also pay Balboa all the costs of collection or costs of exercising its remedies, including attorneys’ fees. You must waive your right to object to jurisdiction in the courts of California as the venue for the resolution of disputes and must waive your right to a trial by jury. See the sample documents in Exhibit J for Balboa’s additional rights and remedies. In consideration of Choice’s agreement to grant Balboa access to our marketing channels, Choice will receive from Balboa a flat payment annually. ACCESS POINT FINANCIAL We have entered into a non-exclusive Qualified Vendor agreement with a third party named ACCESS POINT FINANCIAL (“APF”), which is a company authorized to provide loans. Under this agreement, APF may offer financing to those of our franchisees that qualify and choose to use APF to finance some of the following costs: affiliation fee, site acquisition, construction or remodeling, equipment and/or fixtures, opening inventory or supplies, replacement of equipment or fixtures, and other continuing expenses. These loans are generally for up to 70% to 85% of the value of the hotel and typically range from $200,000 to $10,000,000 for bridge financing, acquisitions, refinance, renovation and brand conversion loans. Interest rates are fixed and are at APF’s discretion. You are not required to use APF as your lender. If you choose to use APF as your lender, you must enter into agreements with APF, substantially in the form attached as Exhibit J or as APF may otherwise require depending on your specific loan. The loan will be for 3 to 10 years and will require monthly payments, with the amount of the payments based on the terms agreed upon. Depending on your scenario, you may be requested to grant a first lien on land and building, or a first or second lien on furniture, fixtures and equipment or, if necessary, a lien on your personal assets. APF will require that you personally guarantee the loan. The loans can be pre-paid and there will be a prepayment penalty. If you default on the note, the entire remaining principal balance becomes due and the lender may have the right to take possession of the collateral and/or sell or lease the collateral. You must waive your rights to presentment for payment, demand, protest, notice of non-payment or dishonor, notices of protest and all other demands or notices. On default, the note will bear interest at the maximum rate permitted by applicable law. You must also pay APF all the costs of collection or costs of exercising its remedies, including attorneys’ fees. You must waive your right to object to jurisdiction in the courts of Atlanta, Georgia as the venue for the resolution of disputes and must waive your right to a trial by jury. See the sample documents in Exhibit J for APF additional rights and remedies. In consideration of Choice’s agreement to grant APF access to our marketing channels, Choice will receive from APF a flat payment annually. ASCENTIUM CAPITAL LLC We have entered into a non-exclusive Qualified Vendor agreement with a third party named Ascentium Capital LLC, which is a company authorized to provide loans. Under this agreement, ASCENTIUM CAPITAL LLC may offer conventional and lease financing to those of our franchisees that qualify and choose to use ASCENTIUM CAPITAL LLC to finance some of the following costs: affiliation fee, costs to meet brand standards, property improvement or remodeling, equipment and/or fixtures, replacement of equipment or fixtures, and other continuing expenses. These loans are generally available for up to 100% of the value of the collateral and range from $5,000 to $500,000. Interest rates are fixed and are determined at ASCENTIUM CAPITAL LLC’s discretion in accordance with its standard underwriting practices. You are not required to use ASCENTIUM CAPITAL LLC as your lender. If you choose to use ASCENTIUM CAPITAL LLC as your lender, you must enter into one or more agreements with ASCENTIUM CAPITAL LLC, substantially in the form attached as Exhibit J or as ASCENTIUM CAPITAL LLC may otherwise require depending on your specific loan. The loan will be for between 12 to 72 months and will require monthly payments, with the amount of the payments based on the terms agreed upon. You must grant a first lien on the financed equipment and, if applicable, a security interest and lien on the land or building. ASCENTIUM CAPITAL LLC may require that you personally guarantee the loan. The loans can be pre-paid with Ascentium Capital LLC’s prior written consent and there is no pre-payment penalty. If you default on the loan, the entire remaining balance becomes due and ASCENTIUM CAPITAL LLC may have the right to take possession of the collateral and/or sell or lease the collateral. You must waive your rights to presentment for payment, demand, protest, notice of non-payment or dishonor, notices of protest and all other demands or notices. On default, the loan will bear interest at the rate set forth in the loan agreement. You must also pay ASCENTIUM CAPITAL LLC all the costs of collection or costs of exercising its remedies, including attorneys’ fees. You must waive your right to object to jurisdiction in the courts of California as the venue for the resolution of disputes and must waive your right to a trial by jury. See the sample documents in Exhibit J for ASCENTIUM CAPITAL LLC’s additional rights and remedies. In consideration of Choice’s agreement to grant ASCENTIUM CAPITAL LLC access to our marketing channels, Choice will receive from ASCENTIUM CAPITAL LLC a flat payment annually. NORTHEAST BANK We have entered into a non-exclusive Qualified Vendor agreement with a third party named NORTHEAST BANK, which is a company authorized to provide loans. Under this agreement, NORTHEAST BANK may offer conventional and Small Business Administration (SBA) financing to those of our franchisees that qualify and choose to use NORTHEAST BANK to finance some of the following costs: affiliation fee, costs to meet brand standards, property improvements or remodeling, equipment and/or fixtures, replacement of equipment or fixtures, debt refinancing, and other reasonable and permissible uses of business debt allowed by the SBA or NORTHEAST BANK’s commercial lending policies. These loans are generally available for up to 90% of the value of the collateral and range from $350,000 to $10,000,000. Interest rates are determined at NORTHEAST BANK’s discretion in accordance with its standard underwriting practices. You are not required to use NORTHEAST BANK as your lender. If you choose to use NORTHEAST BANK as your lender, you must enter into one or more agreements with NORTHEAST BANK, substantially in the form attached as Exhibit K, or as NORTHEAST BANK may otherwise require, depending on your specific loan. The loan will be for between 12 to 300 months and will require monthly payments, with the amount of the payments based on the terms and conditions agreed upon. You must grant a first lien on the financed collateral, which may include a security interest upon business assets or lien on the land or building. NORTHEAST BANK may also require that you personally guarantee the loan and secure the guaranty with additional collateral. The loans can be pre-paid and there are limited pre-payment premiums. In accordance with the guidelines of the SBA Standing Operating Procedures and NORTHEAST BANK’s existing asset management practices, in the event of a default under the loan documents executed in conjunction with the proposed financing, including any payment default, NORTHEAST BANK reserves its right to exercise any and all rights and remedies afforded to it pursuant to the terms of the loan documents and/or applicable law. This may include, without limitation, foreclosure or liquidation of any and all collateral for the proposed loan. In consideration of Choice’s agreement to grant NORTHEAST BANK access to our marketing channels, Choice will receive from NORTHEAST BANK a flat annual payment, as well as a fixed percentage on a predetermined amount of every gross dollar lent. AVANA CAPITAL We have entered into a non-exclusive Qualified Vendor agreement with a third party named AVANA CAPITAL, which is a company authorized to provide loans. Under this agreement, AVANA CAPITAL may offer conventional and SBA 504 loans amongst other products. These loans are generally available for up to a variable percentage rate that ranges from $1M to $45M. Interest rates are determined at AVANA CAPITAL’s discretion in accordance with its standard underwriting practices. You are not required to use AVANA CAPITAL as your lender. If you choose to use AVANA CAPITAL as your lender, you must enter into one or more agreements with AVANA CAPITAL, substantially in the form attached as Exhibit K or as AVANA CAPITAL may otherwise require depending on your specific loan. While loan durations vary depending on the amount and type, typically construction loans are up to 24 months and permanent loans are up to 10 years and will require monthly payments (or however specified in the agreement with AVANA CAPITAL), with the amount of the payments based on the terms agreed upon. AVANA CAPITAL may require that you personally guarantee the loan. If you default on the loan, the entire remaining balance becomes due and AVANA CAPITAL may have the right to take possession of the assets/collateral and/or sell or lease the assets/collateral. You must waive your rights to presentment for payment, demand, protest, notice of non-payment or dishonor, notices of protest and all other demands or notices. On default, the loan will bear interest at the rate set forth in the loan agreement. You must also pay AVANA CAPITAL all the costs of collection or costs of exercising its remedies, including attorneys’ fees. You must waive your right to object to jurisdiction in the courts as specified in the agreement signed with AVANA CAPITAL. See the sample documents in Exhibit K for AVANA CAPITAL’s additional rights and remedies. In consideration of Choice’s agreement to grant AVANA CAPITAL access to our marketing channels, Choice will receive from AVANA CAPITAL a flat payment annually. FUNDATION We have entered into a non-exclusive Qualified Vendor agreement with a third party lender named FUNDATION, which may offer conventional financing to those of our franchisees that qualify and choose to use FUNDATION to finance any and all of the following: general purpose working capital needs, labor costs, affiliation fee, costs to meet brand standards, property improvement or remodeling, equipment and/or fixtures, replacement of equipment or fixtures, and other continuing expenses. These loans range from $20,000.00 to $500,000.00. General purpose lines of credit are also available and range from $20,000.00 to $100,000.00 Interest rates are competitive and are determined at FUNDATION’s discretion in accordance with its credit policy. You are not required to use FUNDATION as your lender. If you choose to use FUNDATION as your lender, you must enter into one or more agreements with FUNDATION, substantially in the form attached as Exhibit K or as FUNDATION may otherwise require, depending on your specific loan. The term loans will be for terms between 12 and 60 months and will require semimonthly or monthly payments, with the amount of the payments based on the terms agreed upon. You may be required to grant FUNDATION a security interest in and lien on the assets of your business. FUNDATION may also require that you personally guarantee the loan. The loans can be prepaid without penalty. If you default on the loan, FUNDATION will have certain rights and remedies granted to them under the loan agreement. Upon default, the entire remaining balance becomes due and FUNDATION may pursue its legal remedies, including against the personal guarantor. Additionally, the loan will bear interest at a default rate set forth in the loan agreement. You may also be responsible for paying FUNDATION’s costs of collection, including attorneys’ fees. FUNDATION’S loan agreements are governed by California or Virginia law, depending on your place of business. See the sample documents in Exhibit K for each party’s additional rights, remedies and obligations. In consideration of Choice’s agreement to grant FUNDATION access to our marketing channels, Choice will receive from FUNDATION a flat payment annually. * * * We have not sold, assigned or discounted our commercial paper to anyone, nor do we intend to (although we are permitted to do so).

Franchisee Revenue and Profit

Some franchised QUALITY hotels have earned the results indicated above. Your individual results may differ. There is no assurance that you’ll earn as much. The data presented in Tables 1, 2 and 3 are based on information that individual franchise owners provided to us and verified as accurate. We have not audited or otherwise verified the accuracy of the information that the franchisees provided to us. Written substantiation of the financial information that forms the bases for our financial performance representations will be made available to you within a reasonable period of time following receipt of your written request. Except as stated in this Item 19, we do not furnish to you or authorize our salespersons to furnish to you any oral or written information or representation on the actual or potential sales, income or profits of any QUALITY HOTEL, QUALITY INN, QUALITY INN & SUITES, QUALITY RESORT, or QUALITY SUITES hotel franchise.