Total revenues for the three months ended March 31, 2000 increased 51 percent to $4.8 million, up from $3.2 million in the same period in 1999.  The largest component of revenue growth continued to come from franchise royalty fees which increased 78 percent from approximately $1.8 million in the first quarter 1999 to approximately $3.1 million in the first quarter 2000.  Franchise royalty fee growth reflects a 77 percent increase in the number of hotels paying royalties to the Company from 224 at March 31, 1999, to 397 at March 31, 2000.  

Franchise sales, openings, ground breaks and brand performance statistics for the first quarter of 2000 were solid.  During the quarter, U.S.  Franchise Systems executed 76 franchise agreements systemwide, 38 properties broke ground or began the conversion process, and 33 properties opened.  USFS ended the quarter with a systemwide total of 425 hotels open and 124 under construction.  This includes 190 Microtel Inns & Suites, 110 Hawthorns and 125 Best Inns & Suites properties open, and 56 Microtels, 40 Hawthorns and 28 Bests under construction.  

First Quarter 2000 Brand Highlights 

Microtel Inns & Suites

• Forty new franchise agreements were executed during the quarter.
• Thirteen Microtels opened and 12 broke ground.
• For the first quarter of 2000 for Microtel Inn & Suites properties open one year or more, RevPar (room revenue per available room) increased from $21.64 to $22.54 or 4.2%; occupancy increased from 51.9% to 52.7% or 1.5%, and average daily rate increased from $41.70 to $42.80 or 2.6%, compared to first quarter 1999. 
• Microtel�s second international hotel opened in Buenos Aires, Argentina.
• Microtel will debut a unique promotion called �Reserve Your $1,000,000 Today� from May 15 to October 15, 2000, and offer guests a chance to win $1 million and other prizes everyday for 154 straight days.

• Twenty-three franchise agreements were executed during the quarter.
• Ten properties opened and 10 broke ground.
• RevPar for properties open one year or more increased from $50.63 to $53.99 or 6.6%; occupancy rate increased from 59.7% to 64.3% or 7.7%, and average daily rate declined from $84.88 to $84.00 or 0.1%, during the first quarter 2000 compared with the same period last year.  
• Approximately 23% of reservations were derived through the Spirit Reservation System for the three months ended March 31, 2000.
• Since Hawthorn began an online auction on February 15, 2000, visits to its web site have more than doubled. 

• Thirteen franchise agreements were executed during the quarter. 
• Ten properties opened and 16 began the conversion process. 
• For properties open one year or more, RevPar increased from $27.94 to $28.96 or 3.6%; occupancy rate declined from 58.1% to 54.4% or 6.5%, and average daily rate increased from $48.06 to $53.25 or 10.8%, compared to the first quarter of 1999. 
• After a successful pilot program, Best is installing EverGreen� rooms to offer health-conscious environmentally-sensitive consumers accommodations with air filtration and water filter systems at its hotels nationwide.  This is expected to generate consumer awareness and trial of the Best product.

Atlanta-based U.S. Franchise Systems was formed in 1995.  USFS franchises Microtel Inns & Suites, the chain of all newly-constructed, budget hotels, Hawthorn, the predominantly upscale extended-stay chain, and Best Inns & Suites, the economy/mid-priced chain.  The Company trades under the symbol USFS on the Nasdaq National Market.

Certain matters discussed in this release are �forward-looking statements�, including statements about the Company�s future plans, goals and other events which have not yet occurred.