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Howard Johnson Inn Franchise ProfileLodging & Leisure > Lodging |
Initial Investment for a Howard Johnson Inn Franchise
The initial investment to open a Howard Johnson Inn franchise ranges from $333,899 to $11,490,271. This investment includes a franchise fee of $35,000, along with additional costs for equipment, real estate, and other startup expenses. Prospective franchisees should be prepared for varying costs based on location and specific property requirements.
Financial Performance Insights
On average, a Howard Johnson Inn generates annual revenue of approximately $1,397,000, with a median revenue of $64,930. The breakeven time is around 12 months, indicating that franchisees can expect to recover their initial investment within the first year of operation. It's essential for potential franchisees to analyze these figures and consider their local market conditions when evaluating profitability.
Ongoing Fees and Financial Requirements
Franchisees are required to pay a royalty fee of 5% of gross revenue, along with a marketing fee of 2%. Additionally, franchisees should have a net worth between $500,000 and $1,000,000, with cash requirements ranging from $333,899 to $3,223,619. Understanding these ongoing financial commitments is crucial for ensuring long-term success in the franchise.
Market Presence and Franchise Growth
As of 2023, there are 143 franchised Howard Johnson Inn units in operation, down from 159 in 2021. This decline in the number of units indicates a competitive market environment. Despite this, the brand's established presence and historical performance can still offer valuable opportunities for franchisees looking to enter the hospitality sector.
Howard Johnson Inn Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Howard Johnson Inn Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 159 | 148 | 143 |
| Net Change YoY | -11 | -5 | |
| Franchised Units | 159 | 148 | 143 |
| Net Change YoY | -11 | -5 | |
| Corporate Units | 0 | 0 | 0 |
| Net Change YoY | 0 | 0 |
Initial Investment
The Howard Johnson Inn franchise requires a low initial investment of approximately $333,899, with a high end reaching up to $11,490,271. This range reflects the varied costs associated with location, size, and specific operational requirements of each franchise unit, making it essential for potential franchisees to assess their financial capabilities thoroughly.
Franchise Fees
Franchisees are required to pay an initial franchise fee of $35,000. Additionally, there is a royalty fee of 5% on gross sales, along with a marketing fee of 2%. These fees contribute to the ongoing support and brand development provided by the franchisor, ensuring franchisees can leverage the established Howard Johnson brand.
Financial Performance
The average annual revenue per Howard Johnson Inn unit is approximately $1,397,000, with a median revenue of $64,930. The financial metrics indicate a potential for profitability, but performance can vary widely, with the lowest annual revenue reported at $46,610 and the highest at $1,397,000. Understanding these figures helps franchisees set realistic revenue expectations.
Breakeven and Payback
Franchisees can expect to reach breakeven within 12 months of operation, with an investment payback period also estimated at 12 months. This rapid return on investment is attractive for entrepreneurs looking to establish a profitable business quickly, although it requires effective management and market positioning.
Franchise Growth
The Howard Johnson Inn franchise has seen a decline in the number of franchised units, with 159 in 2021, dropping to 143 in 2023. This trend may indicate challenges in the market or increased competition, making it crucial for potential franchisees to conduct thorough market research and understand the brand's current positioning.
Operational Insights
The average operating expenses for a Howard Johnson Inn franchise include significant costs such as marketing and advertising at $569,000, alongside general and administrative expenses totaling $130,000. Understanding these costs is vital for franchisees to manage their budgets effectively and optimize profitability in their operations.
Frequently Asked Questions
The initial investment for a Howard Johnson Inn franchise ranges from approximately $333,899 to $11,490,271, depending on various factors like location and property size.