Motel 6 Franchise Cost, Profit & Failure Rate 2024

Motel 6 is a prominent chain of budget motels with locations across the United States and Canada.

It is one of the most popular budget motel chains in North America due to its low prices and extensive range of amenities.

If you have previous experience in the hospitality industry, buying a Motel 6 franchise could be an excellent decision.

However, before you make any decisions, it is essential to understand the costs and requirements associated with a Motel 6 franchise.

In this article, we’ll cover everything you need to know about becoming a Motel 6 franchisee so that you can make an informed and confident decision.

Motel 6 Franchise

About Motel 6 Franchise

Motel 6 is a well-known chain of budget motels that operate in both the United States and Canada.

The brand has become particularly popular among travelers, families, and budget-conscious individuals who are looking for comfortable lodging at affordable prices.

Motel 6 offers a range of amenities to its guests, including cable television and free local calling. Guests at Motel 6 will also be treated to complimentary morning coffee each day during their stay.

What sets Motel 6 apart from its competitors is its focus on providing exceptional customer service in each location.

The staff at Motel 6 are highly trained to provide guests with the highest level of hospitality and make sure that each stay is comfortable and enjoyable.

As a Motel 6 franchisee, you will be responsible for managing a location. 

This includes hiring and training staff, overseeing the operations of the hotel, and providing guests with superior customer service.

You’ll benefit from the Motel 6 brand, which is well-known and respected in the hospitality industry.


Motel 6 Franchise History

Motel 6 Franchise History

Motel 6 was founded in 1962 by two former building contractors – William Becker and Paul Greene – who were dismayed at the limited budget lodging options available at the time.

Their vision was to provide clean and comfortable rooms at an affordable price, and thus Motel 6 was born.

With rates starting at just $6 (hence the name), Motel 6 quickly gained traction among road-weary travelers looking for a comfortable place to stay without breaking the bank.

By 1965, there were already 15 Motel 6 establishments up and running in the western United States. 

In 1990, Accor, a French-based hospitality company, acquired Motel 6 and began to expand the chain.

To grow outside of the western United States, Accor decided to take advantage of franchising opportunities in 1994, with the first Motel 6 franchise location opening in Williams, Arizona. In 2000, the first international Motel 6 opened in Canada.

Today, Motel 6 boasts over 1,400 locations across the United States and Canada, making it one of the most successful budget hotel franchises in operation.

With more than 60 years of history behind it, a Motel 6 franchise is an excellent investment opportunity for those with experience in the hospitality industry.


Franchise Model Table

Cost Or FeesAmount
Initial Investment$222,550–$8,230,104
FranchiseYES
Franchise Fee$20,000–$30,000
Royalty Fee5%
Estimated Outlets1400+

How Much Does It Cost To Open A Motel 6 Franchise?

Opening a Motel 6 franchise may initially seem pricey, but considering the potential return on investment, it can be well worth the up-front costs.

The initial franchise fee for a Motel 6 franchise is generally between $20,000 and $30,000. This covers the cost of licensing fees, signage, and other associated costs.

In addition to the initial fees, Motel 6 franchisees must also be prepared to make a substantial capital investment into the property.

This includes costs for land purchase or rent, building expenses, furniture, equipment, inventory, and more.

The total cost for opening a Motel 6 location ranges from approximately $222,550 to $8,230,104, depending on the size and scope of the project.

In exchange for their investment and use of the brand name and trademarks, Motel 6 requires all its franchisees to pay a royalty fee equivalent to 5% of their gross monthly sales.

For example, if a franchisee generated $100,000 in revenue in one month, they would owe Motel 6 $5,000 in royalties for that period.

Additionally, all Motel 6 franchises are required to contribute 4% of their gross monthly sales toward advertising fees.

This money goes directly into nationwide campaigns that help promote the Motel 6 brand name and drive more business through each of its individual locations.


Motel 6 Franchise Revenue & Profit

The revenue and profit of Motel 6 franchise can vary depending on the location, operating expenses, size of the motel, number of employees, etc.

However, according to sources, a Motel 6 franchise generates $1.8 million in annual revenue on average, with the top 20% of them making as much as $2.5 million. 

So if we assume a profit margin of 35% as per the industry standards, then we can calculate that a Motel 6 franchise owner make $630,000 in annual net profits on average.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%1800000.00
Rent8.13%(146250.00)
Insurance4.06%(73125.00)
Salaries16.25%(292500.00)
Franchise Royalty Fees4.06%(73125.00)
Utilities1.63%(29250.00)
Cost of Goods Sold (COGS)20.31%(365625.00)
Labor (Variable)10.56%(190125.00)
Total (Expenses)65.00%(1170000.00)
Net Profit35.00%630000.00

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Motel 6 Franchise Requirements

Motel 6 is one of the most iconic hospitality brands in the United States and an attractive opportunity for aspiring business owners.

To become a Motel 6 franchise owner, potential franchisees must meet certain financial, experience, and location requirements. 

In addition to the financial requirements mentioned in the previous section, potential franchisees need to have relevant industry experience or at least be familiar with hotel operations.

While no minimum amount of experience is required, having prior knowledge or understanding of hospitality can be beneficial for running a successful Motel 6 business. 

All prospective Motel 6 owners are also required to obtain necessary local permits and licenses in accordance with company standards.

The ideal Motel 6 location should have excellent visibility from highways, access to public transportation, and proximity to tourist attractions and other amenities. 


Motel-6 Failure Rate

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2019886957+71
20209571059+102
202110591090+31

For the Franchised outlets:

  • In 2019, the growth rate was (71)/886×100≈8.01%
  • In 2020, the growth rate was (102)/957×100≈10.65%
  • In 2021, the growth rate was (31)/1059×100≈2.92%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2019370251-119
2020251146-105
2021146103-43 

For the Company-Owned outlets:

  • In 2019, the failure rate was (119)/370×100≈32.16%
  • In 2020, the failure rate was (105)/251×100≈41.83%
  • In 2021, the failure rate was (43)/146×100≈29.45%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
201912561208-48
202012081205-3
202112051193-12

For Total outlets:

  • In 2019, the failure rate was (48)/1256×100≈3.82%
  • In 2020, the failure rate was (3)/1208×100≈0.25%
  • In 2021, the failure rate was (12)/1205×100≈1.00%

According to the above-mentioned data, there is no failure rate for franchised outlets as the outlets at the end of the year increased during the span of 3 years.

We can see that the franchised outlets for Motel-6 grew from 2019 to 2021, showing a growth rate between 8.01% and 2.92%.

On the other hand, for company-owned outlets, the failure rate of Motel-6 was lying in the range between 32.16% and 29.45% for the same period of time.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the number of outlets of Motel-6 has been decreasing consecutively for the years 2019-2021 showing a total failure rate between 3.82% and 1.00%.


Payback Period Of Motel-6

On the basis of total investment of $8,230,104 and the yearly profit of $630,000 of Motel-6 franchises, we can calculate the time it will take to recoup the investment amount.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Total Investment / Yearly Profit = $8,230,104 / $630,000 = 13 years

Based on these figures, it will take approximately 13 years to pay back the initial investment for Motel-6. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Motel 6 Franchise Training And Support

Motel 6 understands the importance of having a well-trained franchise team and staff to ensure customer satisfaction.

To support this mission, they provide comprehensive training programs for potential franchise owners and their employees.

Motel 6 provides a manager-in-training program for prospective franchise owners, which is a five-week in-person learning experience.

This includes 3 weeks with certified field trainers who teach aspiring franchisees how to operate first-hand and 2 weeks of classroom training. 

This program is designed to help impart essential skills and best practices for running a successful Motel 6 property.

In addition to in-person training, Motel 6 offers an online training platform called iLearn@6. 

It includes over 200 courses related to developing an effective team, being a team player, communication strategies, and more.

There are also 50+ customized courses available that focus on operating and managing a Motel 6 property effectively.


Motel 6 Franchise Terms Of Agreement & Renewal

Motel 6 Franchise Terms Of Agreement & Renewal

Motel 6 franchises are available in the form of both renovated or new construction.

When signing up for their franchisee program, prospective owners can choose between a 15-year term for a renovated property or a 20-year term for a new construction project.

At the end of each term, existing Motel 6 franchise owners are allowed to renew their contracts for an additional 10 years.

This is subject to approval from Motel 6 and requires the payment of a renewal fee equivalent to 50% of the initial franchise fee paid at the start of their contract.

However, only franchisees who have met the financial, operational, and customer satisfaction requirements set by Motel 6 are eligible for renewal.


Motel 6 Franchise Obligations And Restrictions

Motel 6 franchisees are obligated to follow brand standards, promote the Motel 6 name and its services, provide training and professional development opportunities for employees, and perform various other duties.

They must also abstain from conducting any activities that could damage or tarnish the Motel 6 brand.

Franchisees are not allowed to offer products, services, or prices that are not approved by Motel 6. They also must not compete with other Motel 6 properties in their area.

Besides that, Motel 6 requires its franchise owners to obtain the necessary permits and licenses needed for running a business in their location.


Motel 6 Franchise Financial Assistance

Motel 6 doesn’t provide any direct financial assistance to its franchisees.

However, they do offer a 30% discount on the initial franchise fee for veterans in honor of their service and dedication.

This discount is currently offered in the US only and is valid for any of the Motel 6 brand hotels.

Franchisees who want to apply for financing can easily do so through third-party lenders like SBA or other banks that offer loans and lines of credit.

To obtain financing, franchisees must meet the necessary requirements set by these lenders, mainly having a good credit score and a detailed business plan.

It is important to note that any finance agreements are between the lender and the franchisee; Motel 6 does not provide any warranties or guarantees related to it.

Potential franchisees interested in hospitality or hotel can investigate opportunities with Marriott Franchise.


Motel 6 Comparison

CompanyMotel 6Days Inn
Year Founded19621970
Franchise Fee$20,000–$30,000$35,000
Initial Investment$222,550–$8,230,104$292,634–$8,281,441
Number of Outlets1400+1700+

Conclusion

Opening a Motel 6 franchise is ideal for entrepreneurs looking to enter the hospitality business.

With comprehensive training programs, support services, and flexible terms of the agreement, Motel 6 makes it easy for aspiring franchise owners to launch their own successful properties.

With any new venture comes risk; however, prospective franchisees can significantly reduce their risk by doing thorough research and preparing a detailed business plan.

Ultimately, by following the guidelines and standards set out by Motel 6, potential franchise owners can turn their dreams of running a successful property into reality.


FAQs

Does Motel 6 Offer Franchising?

Yes, Motel 6 offers franchising opportunities to entrepreneurs looking to enter the hospitality business.

Who Owns Motel 6?

Motel 6 is owned by Accor, a French-based hospitality company. In 2012, The Blackstone Group’s real estate business purchased the company from Accor and established G6 Hospitality as the management company of Motel-6.

How Many Motel 6 Locations Are There?

Currently, there are over 1,400 Motel 6 locations across the United States and Canada.

Is Motel 6 Franchise A Good Investment?

Yes, a Motel 6 franchise is a good investment.

It has an average net operating income of 44.16% and a strong customer base, making it a lucrative opportunity for aspiring entrepreneurs.

Who founded Motel-6?

Motel-6 was founded in Santa Barbara, California, by William W. Becker and Paul A. Greene.

Where is the headquarters of Motel-6?

The headquarters of Motel-6 is located in Carrollton, Texas, United States.

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