U.S. Franchise Systems, Inc.
Ticker: USFS 13 Corporate Square, Suite 250
Exchange: NASDAQ-National Market Atlanta, Georgia 30329
Industry: Service (404) 321-4045

Type of Shares:Class A Common Shares Filing Date:9/5/96
U.S. Shares:2,325,000 Offer Date:10/25/96
Non-U.S. Shares:0 Filing Price: -
Primary Shares:1,825,000 Offer Price:$13.50
Secondary Shares:500,000 Gross Spread:$0.94
Offering Amount: Selling:$0.56
Expenses: - Reallowance:$0.10
Shares Out After: -

ManagerTierPhone
Schroder Wertheim & Company, IncorporatedLead Manager (212) 492-6900
Montgomery SecuritiesCo-manager (415) 627-2220

Audited
Income
Latest
Unaudited
Income
Prior
Unaudited
Income
Balance
Sheet
6/30/96 6/30/96
Revenue:$0.40Assets:$19.03
Net Income:-$3.20Liabilities:$1.10
EPS:-$3.63Equity:$17.93

Note: Dollar amounts are in U.S. millions; Audited figures expressed as full year,
unaudited figures are partial year

Business Description
The company was formed in August 1995 to acquire, market and expand high-quality, well-positioned brands with potential for rapid growth through the sale of franchisees to third-party operators. The company's initial brands, both of which are in the lodging industry, are the Microtel budget brand and the Hawthorn Suites upscale, extended-stay brand. The company acquired the rights to these brands because of their potential for significant growth, which reflects, among other things, their profitability for franchisees at the property level and their positions in attractive segments of the lodging industry. The company has assembled an experienced management team and sales force led by its Chairman, President and Chief Executive Officer, Michael A. Leven, who has 35 years of experience in the lodging industry, and its Executive Vice President and Chief Financial Officer, Neal K. Aronson, a former principal of the New York investment firm Odyssey Partners, L.P. Mr. Leven most recently served as President and Chief Operating Officer of Holiday Inns Worldwide and President of Days Inn of America, Inc., the two largest lodging brand franchisors in the world.

Use of Proceeds
The proceeds from the proposed offering will be used for working capital and general corporate purposes, which may include i) funding the company's remaining obligations under the Microtel Acquisition Agreement, ii) acquiring additional lodging or other service oriented brands or exclusive franchise rights iii) making initial deposits in connection with the American Dream Program until qualified leases can be identified iv) investing in financing programs developed by its wholly owned subsidiary v) investing in entities that make equity investments in hotel properties built and managed by certain franchisees with the potential for multi-unit development..

Last updated: 12/8/96

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