Planning rapid development first in the Toronto metropolitan area, then to Ontario, Quebec and western Canada, Microtel properties are also in the works for the country's major airports.

According to Mike Leven, president and chief executive officer of USFS, Vinings Franchise Systems -- with offices in Toronto, Vancouver and Atlanta -- is a new company formed to develop and franchise hotel properties throughout Canada. "We're thrilled that Vinings Franchise Systems is spearheading Microtel's development in Canada," he said. "Vinings is well-oriented to the Canadian market. As with our other international licensees, we will do all we can to help them grow the Microtel brand and provide our Canadian neighbors with an innovative concept to offer guests quality, safety and a comfortable stay in the right location."

Said Peter Murphy, CEO of Vinings Franchise Systems, "We chose Microtel because it is superior to everything else in its category, with rates that are 20 to 30 percent less than the competition. With strong corporate leadership, Microtel has proven itself as the industry leader for budget hotels of the future." He added, "As a Canadian company, we are excited about the many job opportunities that will be created, both on the construction and operations sides."

All Microtel properties are newly constructed and offer guests chiropractic mattresses, remote cable TV, CNN and ESPN, and complimentary morning coffee. Murphy, who lived in Toronto until recently, was formerly CEO of a Canadian resort development firm; he has 20 years of international sales management, construction and development experience. 

President of Vinings Franchise Systems is Klaus J. Henck, with more than 35 years experience in the hotel industry. Best known for bringing Renaissance Hotels to the U.S., Henck formed Astor Management in 1983 and has been providing management and consulting services to properties around the globe.

Other International Alliances

Microtel first went international when USFS entered into a master franchise agreement to bring its concept to Argentina and Uruguay.  Further fueling international growth, USFS signed a master franchise agreement to build properties throughout Central America in Honduras, Costa Rica, El Salvador, Nicaragua and Panama; the first will break ground in San Pedro Sula, Honduras this month.  USFS has also signed agreements for Microtels in the Philippines, Brazil, the Dominican Republic, Haiti, and the Turks  Caicos Islands, and is working with companies in Mexico, Europe, India and South Africa on similar kinds of agreements.

As of July 14, there were 152 Microtels open or under construction, and an additional 352 under development.

About the Company

Atlanta-based U.S. Franchise Systems was formed in August 1995 by Michael A. Leven, a 38-year veteran of the lodging industry, and Neal K. Aronson, former principal of the New York investment firm of Odyssey Partners, L.P. The company purchased the franchise system rights to the Microtel brand 1995. The company acquired the franchise rights to Hawthorn Suites in 1996, and full
ownership of the brand in March 1998.  All Hawthorn locations are serviced by the Spirit Reservation System, which also operates the Hyatt Worldwide Reservations Service.  U.S. Franchise Systems acquired the exclusive worldwide rights to Best Inns  Suites, along with the assets of a fee-based management company in April 1998.  All Best hotels are AAA rated and offer free local phone calls and Special K(R) breakfast.

Certain of the above statements are forward looking statements that involve risks and uncertainties. Actual results could differ materially as a result of a variety of factors, including competitive developments, and risk factors listed from time to time in the Company's SEC reports.