For Atwell Suites, what were the franchise royalty fees for the year ended December 31, 2022?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Year ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| Royalty fees | under | franchise | ||||
| agreements | $ 767,629,704 | $ 746,518,796 | $ 695,230,885 | |||
| Amounts transferred to affiliate under | ||||||
| the Agreement | (729,248,219) | (709,192,857) | (660,815,717) | |||
| Net revenue under the Agreement | 38,381,485 | 37,325,939 | 34,415,168 | |||
| Contract assets deduction in revenue | (589,313) | (11,699,506) | (9,750,037) | |||
| Franchise royalty fees | $ 37,792,172 $ 25,626,433 | $ 24,665,131 |
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the franchise royalty fees for the year ended December 31, 2022, were $24,665,131. This figure represents the net franchise royalty fees after deductions related to contract assets. These contract assets are amounts paid to hotel owners to secure franchise agreements, which Atwell Suites treats as consideration payable to a customer. The amortization of these contract assets is recorded as a deduction to franchise royalty fee revenue over the initial term of the agreement.
It's important to note that Atwell Suites' parent company, Six Continents Hotels, Inc., handles certain marketing, reservation, and loyalty programs. Assessments to franchisees for these programs are remitted to Six Continents Hotels, Inc. and are not included in the reported franchise royalty fees. This means the actual revenue generated by Atwell Suites franchises may be higher, but the reported royalty fees reflect only the portion retained by the company after these deductions and payments to affiliates.
For a prospective franchisee, understanding these financial details is crucial. The net franchise royalty fees provide insight into the revenue Atwell Suites recognizes after accounting for various deductions and payments to affiliates. While the gross royalty fees generated by the franchises may be higher, the net figure reflects the actual income stream for Atwell Suites. Franchisees should inquire about the specific amounts remitted to Six Continents Hotels, Inc. for marketing and other programs to get a complete picture of the financial flows.
Furthermore, the treatment of contract assets and their impact on royalty revenue is a significant factor. The deduction of contract asset amortization reduces the reported royalty fees, which could affect the perceived profitability of Atwell Suites. Franchisees should investigate the nature and extent of these contract assets and their potential impact on the long-term financial performance of the franchise system. Understanding these nuances is essential for making an informed investment decision.