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Roll Out the Red Carpet

Owning a hotel may not be impossible, but it's definitely not for everyone.

When you played Monopoly as a kid, did you buy the hotels? They seemed so complicated and expensive, but you knew if you had one, you could make a fortune anytime your little brother landed on your property.

Real hotels operate much the same way. They're a big investment with a costly build out and staffs whose populations rival those of small nations. But while operating a hotel is as big an undertaking as it seems, it's not ridiculous to imagine yourself as the franchisee of your own hotel, motel or inn.

Franchise Zone asked Mike Leven, founder and CEO of US Franchise Systems Inc.-franchisor of Best Inns & Suites, Hawthorn Suites and Microtel Inns & Suites-whether opportunities exist for "regular guys" in the hotel business.

Franchise Zone:Who is your typical franchisee?

Mike Leven: It's different for the different brands we have. The typical franchisees in our portfolio of hotels are single unit owner/operators. Of our 534 open hotels, we have approximately 350 to 400 owners.

How many of those are regular entrepreneurs who own and operate only one business?

Very few. In most cases, they may own only one of our properties but own other things as well, such as fast-food restaurants, general contracting businesses, homebuilder businesses or maybe some other motels.

Do misconceptions exist about owning a hotel? Do people think it's something an entrepreneur couldn't do?

I think most people believe hotels or motels are beyond their means, but entrepreneurs have a way of expanding in their own mind what they can do, which is what really drives entrepreneurship. There are people who don't think they can go to the hotel level financially, but not a lot.

Why do you think those misconceptions exist?

Because people who aren't entrepreneurs don't think like entrepreneurs. Entrepreneurs think they can climb a mountain blindfolded with one leg, and normal people, particularly corporate people, really are in the battle of surviving on the mountain, not climbing it.

Do you think a hotel isn't an ideal first business?

It generally isn't, because it's more expensive than just opening a maintenance service or some franchise like that. Generally people have gotten their feet wet in other businesses prior to coming to the hotel business.

What are some of the qualities your company looks for in its franchisees?

The most important qualities are integrity, a track record of honesty and the ability to be a good community citizen. Basically, someone who's a decent person.

What financial requirements does your company have?

We look for about $1 million or so of net worth, but, generally speaking, that can vary, because a number of these entrepreneurs bring partners with them who have the net worth.

You said a hotel is different from a lot of other businesses. How is it different?

It's not that much different-it's just more expensive. The building itself is more expensive. Opening a service for $30,000 or $40,000 is different from opening a hotel for $2 million. There's a lot more financing, taxes and accounting involved.

Do interested people get scared off because of the investment?

Some people do.

What should someone considering a hotel keep in mind when looking at this?

That it requires an awful lot of hard work, and there are significant risks in the early going until the hotel grows up and matures, but of all the franchises, a successful hotel is better than a successful anything else.

Why is that?

Because it throws off more cash and, if you can get it done and you're willing to take a bigger financial risk, it's a much more rewarding experience. The right hotel can feed a lot of families.

So it is possible for a regular guy to have a hotel?

Oh yeah. It takes a little more work, of course, because they have to go out and raise the money, but it's possible. Lots of people do it.

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