How to Finance an avid hotels Franchise: New-Build Midscale
By Marc Cornella
An avid hotels franchise loan funds a hotel brand that is built only from the ground up. Every avid hotel is new construction, so a borrower is financing land, a multi-story building, furniture and fixtures, pre-opening costs and the months it takes a new hotel to find its occupancy.
That makes the deal closer to a commercial development project than a typical franchise purchase. Below we cover what the company has said publicly about the brand, what to check in the Franchise Disclosure Document (FDD), the SBA Franchise Directory note and how owners structure construction and working capital financing.
US Professional Funding is not affiliated with, sponsored by or endorsed by avid hotels; the name is used only to describe the business. Figures from the franchisor’s disclosure document and the company’s own materials can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice.
avid hotels Franchise Loan at a Glance
- Franchisor: Holiday Hospitality Franchising, LLC licenses the brand in the United States as part of a large global hotel company.
- Positioning: a midscale, new-build brand focused on “the basics done exceptionally well” at a fair price.
- Launch: revealed and opened for U.S. franchising on September 18, 2017; the first hotel opened in August 2018 in the Oklahoma City area.
- Prototype at launch: 95 to 100 keys, a minimum of three stories, on an average lot of about 1.5 acres, according to the company’s 2017 launch release.
- System size: 89 open hotels with 7,859 rooms and 112 more in the pipeline as of September 30, 2026, according to the company’s brand page.
- Royalty at launch: the company said U.S. licensing would carry a 5% royalty fee, with a temporary reduction offered only to the first 100 signed agreements. Item 6 of the current FDD gives today’s rate.
- Investment and fees: the application fee, Item 7 investment range and other costs appear in the current FDD rather than on the company’s public pages.
- SBA Franchise Directory: listed as avid Hotels under code S2652, with a note on third-party management agreements explained below.
What Is avid hotels?
The brand was created to fill a gap in the midscale segment. When the company revealed it in September 2017, it described the target guest as a traveler who wants well-executed basics without paying for extras, and it said an owner advisory board helped shape the design. Franchising opened in the United States that day and is also offered in Canada and Mexico.
The first avid hotel opened in August 2018 in the Quail Springs area of Oklahoma City, 199 days after groundbreaking, according to the company. By June 2025, the brand celebrated its 80th property, and the company described avid as its fastest-growing new-build brand. The concept is deliberately simple: sound-reducing guest rooms with a workspace, a fitness center and a complimentary hot breakfast, with no full restaurant or banquet operation to staff and finance.
Why lenders view avid the way they do. The brand brings a large reservation and loyalty platform, a lean service model and a standardized prototype. But every project is a new build with no operating history, so underwriting rests on the feasibility study, the developer’s track record and the construction budget. Our page on hotel start-up and new construction financing covers how those projects are typically structured.
avid hotels Franchise Costs
The company does not publish an investment range on its public pages, so start with Item 5 (initial fees) and Item 7 (estimated initial investment) of the current FDD.
Initial franchise or application fee
The first line of any avid hotels franchise loan budget is the application fee. Check Item 5 for the exact amount, when it is due, whether any part is refundable if the project does not proceed, and whether a separate fee applies to a later change of ownership.
Land, site work and construction
Because avid is new-build only, land and construction are the largest parts of the budget. Site work, utilities, parking, design, permits, impact fees and the general contract all belong here and vary widely by market.
Furniture, fixtures and equipment
Case goods, beds, televisions, lighting, the breakfast area, lobby and fitness furniture and laundry equipment make up this budget. Read Item 8 for any approved-vendor or procurement requirements.
Working capital and total investment
Item 7 usually includes an “additional funds” line for a stated period, but payroll, debt service and franchise fees start before a new hotel stabilizes. When you read Item 7, check:
- Whether the estimate includes land and what room count it assumes
- Construction, site work and soft costs
- Furniture, fixtures, equipment, signage and technology
- Additional funds and the period they cover
Compare the ranges with your contractor’s bid for your actual site, and keep a contingency on top.
Ongoing Fees and How They Affect Your Loan
Hotel lenders size a loan on net operating income, and franchise fees come off the top. At launch in 2017, the company said U.S. avid licensing would carry a 5% royalty fee. Item 6 of the current FDD sets out the royalty actually in effect today along with the other recurring charges, which for hotel brands commonly include:
- A royalty based on gross rooms revenue
- A marketing, reservation or system services assessment
- Loyalty program charges tied to member stays
- Technology and connectivity fees
- Fees for transfers, renewals and inspections
Because most of these charges are percentages of revenue, they rise and fall with room sales. Any avid hotels franchise loan is sized after these fees, a management fee and a replacement reserve, so a pro forma that leaves them out overstates the loan the hotel can support.
Renovation and refresh planning. A new avid hotel will not need a property improvement plan on day one, but plan for periodic refreshes and expect one when the hotel is eventually sold. Our article on financing brand-required hotel renovations explains how owners fund that work later.
Franchisor Requirements for New Owners
The company has not published a fixed minimum net worth or liquid capital figure for avid in the materials we reviewed. Instead, the brand approves both the owner and the project: the market, the site, the proposed room count and design, and the applicant’s financial capacity and hotel experience.
In general, an applicant controls a site, submits the application and fee, signs the license agreement once approved, then completes plans and construction under the brand’s deadlines. Because brand and loan approval depend on each other, developers usually run both in parallel and match the deadlines to the loan commitment.
Ways to Own an avid hotels Property
The route you take determines which avid hotels franchise loan structure fits.
New development. This is the primary route, since the brand is built only as new construction. It requires land or a ground lease, entitlements, a contractor with hotel experience, a construction loan and a ramp-up plan.
Dual-brand development. In 2021, the company introduced a dual-brand prototype that pairs avid with one of its extended-stay brands under one roof, and by June 2025 four U.S. dual-brand properties were open. A dual-brand project spreads land and shared-space costs across two room types, but it adds a second license agreement and a more complex feasibility study.
Buying an existing avid hotel. As the system matures, some hotels will change hands, giving a buyer an operating history to underwrite and a change of ownership process to complete. See our page on hotel acquisition financing for how lenders approach existing properties.
Financing Options for an avid hotels Franchise
Construction loans. Most new avid projects start with a construction loan funded in draws against completed, inspected work, backed by a detailed budget and contingency.
SBA 7(a) loans. The SBA 7(a) program can finance construction and acquisition of owner-operated hotels and can include furniture, fixtures, equipment and working capital in one structure. The 7(a) program maximum is currently $5 million, and program rules can change, so many new-build projects use 7(a) only for part of the capital stack or move to 504 or conventional financing.
SBA 504 loans. SBA 504 loans are designed for owner-occupied real estate and long-lived fixed assets, which fits a ground-up hotel well. The structure pairs a first mortgage from a lender with a loan through a certified development company and a borrower contribution, subject to program rules and approval.
Conventional hotel construction and term loans. Developers with hotel experience and strong liquidity often use conventional commercial financing, especially for larger projects or owners building several hotels. A construction loan may convert to a permanent loan or be refinanced once the hotel stabilizes.
Furniture, fixtures and equipment financing. Some owners finance the guest room furniture package, televisions, fitness equipment or laundry equipment separately. The primary lender will count that debt when measuring coverage.
Working capital and lines of credit. A new hotel needs cash for pre-opening payroll, training and marketing and to carry operations while occupancy builds. Our page on hotel working capital and lines of credit covers those needs.
Seller financing on resales. When buying an existing avid hotel, part of the price may sometimes be carried by the seller. A seller note is typically subordinate to the primary loan, and lenders and SBA rules may limit how it is structured.
SBA Loans for avid hotels Franchisees
SBA-backed loans are made by participating lenders with an SBA guarantee on part of the loan, and the SBA Franchise Directory simplifies the lender’s franchise review.
The directory listing. The brand appears on the SBA Franchise Directory as avid Hotels under code S2652. A listing helps the lender confirm the franchise agreement is eligible, but it does not approve any borrower or guarantee a loan.
What the directory note means. The listing carries this note: if the applicant also operates under a management agreement with a third party, the lender or certified development company must review the management agreement in accordance with SOP 50 10 to determine whether there is affiliation between the applicant and the management company, and the applicant is not eligible if the management company is, or is affiliated with, the franchisor. In plain English, you can hire an independent hotel management company, but the lender must review that contract, and a hotel managed by the franchisor or its affiliate would not qualify for SBA financing under this note.
SBA tips for avid developers. Have the license agreement or approval letter, the construction budget and contract, the feasibility study, any management agreement and a sources and uses statement ready, along with personal financial statements, tax returns and résumés for every owner. Our comparison of SBA 7(a) and 504 loans for hotels explains when each program tends to fit.
How Lenders Evaluate an avid hotels Franchise Loan
Personal credit, net worth and liquidity. Lenders review the credit, tax returns and debts of each principal, and significant owners typically sign personal guarantees. New construction requires real equity plus reserves for overruns, delays and ramp-up.
Hotel development and operating experience. Prior hotel construction and operations weigh heavily; first-time developers often partner with an experienced owner or operator.
Feasibility study and projections. For a new avid, the feasibility study is the core document. It should support occupancy and rate assumptions with local demand from highway, corporate, university and leisure travel, show a realistic ramp-up and include every franchise fee, a management fee and a replacement reserve.
The FDD and license agreement. Lenders review the license term, construction and opening deadlines, transfer provisions, termination rights and any comfort letter the franchisor provides. They want the license to run at least as long as the loan.
Site, construction and real estate. Expect an appraisal, an environmental review, a survey and a review of the construction contract, contractor and zoning.
Historical financials on resales. For an existing hotel, lenders study several years of operating statements and the seller’s tax returns. Our article on what hotel lenders require walks through those reviews.
The New-Build Prototype and Your Budget
A standardized prototype helps every party in the deal: the architect starts from a known plan, the contractor prices a familiar building, and the lender can compare the budget with other projects of the same brand. Because the launch prototype called for at least three stories on an average lot of about 1.5 acres, confirm the site’s size, frontage, parking and access against current brand standards before signing a land contract.
Multi-Unit Growth and Development Agreements
Each hotel generally has its own license agreement and approval, so growth happens site by site. Financing a second or third hotel starts with the performance of the first: lenders review global cash flow, remaining liquidity and the team’s capacity to manage another build. SBA limits apply across all of a borrower’s SBA loans, so larger portfolios often shift to conventional financing. Our article on financing a hotel portfolio covers how owners scale.
Real-World Scenarios
An experienced owner adding a new build. An owner of two limited-service hotels secures a site near a growing highway interchange. With a feasibility study and an executed license, the owner pursues an SBA 504 structure for land and construction and a separate line of credit for the ramp-up period.
A dual-brand project. A developer plans a dual-brand building. The lender asks for a feasibility study covering both room types and reviews both license agreements before committing.
A first-time investor with an operator partner. A buyer with capital but no hotel experience partners with an experienced operator and a third-party management company. Because of the SBA directory note, the lender reviews the management agreement early to confirm the company is not affiliated with the franchisor.
Common Mistakes to Avoid
- Budgeting from a rough cost per room instead of a site-specific contractor bid and the current Item 7 table
- Signing a land contract before confirming the site meets current prototype requirements
- Leaving out interest carry, ramp-up losses and a construction contingency
- Building projections without the royalty, marketing, loyalty and technology fees
- Hiring a management company without checking the SBA directory note on affiliation
For more, read the hotel financing mistakes that cost owners the most.
Next Steps to Finance Your avid hotels Franchise
Step 1: Confirm your path. Decide whether you are building a standalone avid, a dual-brand project or buying an open hotel; each changes the budget and lender pool.
Step 2: Request and review the FDD. Read the current disclosure document with a franchise attorney, focusing on Items 5, 6, 7, 8, 11 and 17.
Step 3: Commission a feasibility study. Lenders rely on one for new construction.
Step 4: Build a full sources and uses. Include land, hard and soft costs, furniture and equipment, fees, technology, opening costs, interest carry, working capital and a contingency. Our SBA loan calculator can help with early payment estimates, which are for planning only.
Step 5: Talk with a financing specialist. Before you commit to land, confirm which structures may fit and how much equity you will likely need.
Step 6: Run brand and loan approvals together, then build. Align the license, construction deadlines and loan commitment, then manage draws, order furniture on time and keep reserves for the ramp-up.
avid hotels Franchise Loan FAQs
How much does it cost to build an avid hotel?
The company does not publish an investment range on its public pages. Item 7 of the current FDD gives the estimated initial investment and the assumptions behind it, and your actual cost depends on land, room count, market and construction pricing.
What is the avid hotels royalty fee?
When the brand launched in 2017, the company said U.S. licensing would carry a 5% royalty fee. Check Item 6 of the current FDD for the rate in effect today and for marketing, loyalty and technology fees.
How much net worth or liquid capital do I need?
No fixed minimum is published in the materials we reviewed. The brand and your lender will each judge whether your equity and reserves fit the size of the project, and new construction generally requires substantial liquidity.
Can I use an SBA loan for an avid hotel?
Possibly. The brand is listed on the SBA Franchise Directory under code S2652, and hotels are a property type SBA lenders frequently finance. Eligibility still depends on the borrower, the project, program rules and lender approval, and the management agreement note applies.
Do I need hotel experience?
Lenders and the brand both weigh experience heavily, particularly for new construction. Partnering with an experienced operator or hiring a qualified management company can help.
Can I convert my existing hotel to avid?
The company describes every avid property as new construction, so conversion is not the usual path. Confirm current policy in the FDD.
Can I buy an existing avid hotel?
Yes, when one is for sale. The brand must approve the buyer, and lenders underwrite the hotel’s operating history.
Does the franchisor offer financing?
Check Item 10 of the current FDD, which describes any financing the franchisor offers. Most owners arrange construction and permanent financing through lenders.
How long is the avid license agreement?
The term, renewal and transfer rules appear in the license agreement and Item 17 of the FDD. Lenders generally want the license to run at least as long as the loan.
Can I own more than one avid hotel?
Yes. Many hotel owners develop several properties over time. Each hotel typically needs its own approval, and lenders review the performance of your existing hotels before financing the next.
Final Thoughts
An avid hotels franchise loan is a development loan first and a franchise loan second. Owners who control a site that fits the prototype, budget for contingency and ramp-up, and line up the license, feasibility study and lender together give themselves the best chance of a smooth opening.
US Professional Funding helps developers and owners finance franchised hotels, including new construction, acquisitions, renovations and refinancing. Learn more about our franchise financing programs and hotel and motel financing.
