Franz Josef is such a teeny little place that almost every hotel is walking distance. By the way, almost every motel (big and small) looked decent, and none were outwardly scary.
The good: Very clean room that has been recently updated. The restaurant is right next door. The bad: None really; it's just a simple place with no frills. Be sure to ask about the free glow worms walk that starts at the end of the street. I recommend it.