Comfort Inn 2007 Annual Report Download - page 24

The following table presents key worldwide system size statistics as of and for the year ended December 31, 2007.
Open and Operational
Under Development
Hotels
Rooms
Hotels Rooms Additions Repositionings Terminations
Comfort......................... 2,467 188,596 491 35,877 176 (20) (128)
Quality .......................... 1,210 118,386 120 10,667 134 16 (68)
Clarion .......................... 282 37,867 48 6,912 35 2 (27)
Sleep Inn ....................... 370 28,176 143 10,048 31 — (9)
MainStay Suites ............ 30 2,258 53 4,759 2 — (1)
Econo Lodge................. 870 52,693 54 3,414 55 (2) (43)
Rodeway Inn................. 282 16,800 71 3,924 68 4 (28)
Suburban ....................... 54 6,773 48 4,238 6 — (12)
Cambria Suites.............. 4 459 65 8,143 4 — —
Flag Hotels.................... 1 19 — — — — (1)
Totals ............................ 5,570 452,027 1,093 87,982 511 — (317)
Franchise Sales
Brand growth is important to our business model. We have identified key market areas, for certain brands, for hotel
development based on supply/demand relationships and our strategic objectives. Development opportunities are typically
offered to: (i) existing franchisees; (ii) developers of hotels; (iii) owners of independent hotels and motels; (iv) owners of
hotels affiliated with other franchisors’ brands; and, (v) contractors who construct any of the foregoing.
The franchise sales organization is structured in three brand specific divisions with both sales managers and
franchise sales directors responsible for specific brands. These divisions consist of Cambria Suites, extended stay market
brands (MainStay Suites and Suburban Extended Stay Hotels) and midscale and economy brands (Comfort, Quality,
Clarion, Sleep, Econo Lodge and Rodeway). Each division employs both sales managers as well as franchise sales
directors. Sales managers have geographic oversight over all of the brands in their division to ensure each prospective
hotel is placed in the appropriate brand, facilitate teamwork and information sharing amongst the sales directors and
provide better service to our top developers. Our franchise sales directors operate in brand specific selling teams to
leverage their brand expertise to enhance product consistency and deal flow. The structure of this organization supports
the Company’ s efforts to leverage its core strengths in order to take advantage of opportunities for further growth and
integrate our brands and strategies to allow our brand teams to focus on understanding, anticipating and meeting the
unique needs of key customer segments. Franchise sales efforts emphasize the benefits of affiliating with one of our
brands, our commitment to improving hotel profitability, our television, radio and print brand advertising campaigns, our
central reservation system, our training and support systems (including our proprietary property management systems) and
our history of growth and profitability.
During 2007, Choice received 1,267 applications for new franchise agreements (not including relicensings of
existing agreements) compared to 1,137 in 2006. These applications resulted in the execution of 770 new domestic
franchise agreements in 2007, compared to 720 in 2006. An application received does not always result in an executed
franchise agreement during the year received or at all due to various factors, such as financing and agreement on
contractual terms. Our objective is to continue to grow our portfolio by continuing to sell our existing brands, creating
extensions of our existing brands and introducing new brands within the various lodging chain segments.
Because retention of existing franchisees is important to our growth strategy, we have a formal impact policy. This
policy offers existing franchisees protection from the opening of a same-brand property within a specified distance,
depending upon the market in which the property is located.
Franchise Agreements
Our standard domestic franchise agreement, excluding contracts for Suburban Extended Stay Hotel (“Suburban”),
grants a franchisee the right to non-exclusive use of our franchise system in the operation of a single hotel at a specified
location, typically for a period of 20 years, with certain rights to each of the franchisor and franchisee to terminate the
franchise agreement before the twentieth year. Suburban franchise agreements acquired through the Company’ s
acquisition of Suburban Franchise Holding, Inc. contain 10-year terms.
The Company may also enter into master development agreements with developers that grant limited exclusive
development rights in geographical areas and preferential franchise agreement terms for one-time, non-refundable fees.
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