How are partial payments applied under the Note for Americas Best Value Inn?

According to the 2025 Americas Best Value Inn FDD, any partial payments made under the Note may be applied at the discretion of the Note's holder. Specifically, the holder can choose to apply these payments towards interest, the principal amount, or any costs associated with the Note. This means that if a franchisee makes a partial payment, Americas Best Value Inn has the flexibility to decide how that payment is allocated, which may not necessarily be in the way most beneficial to the franchisee.

This clause provides Americas Best Value Inn with significant control over the application of payments, potentially impacting the franchisee's repayment schedule and overall financial obligations. For instance, if costs are high, the holder might allocate a larger portion of the payment to cover those costs rather than reducing the principal balance. This could extend the repayment period and increase the total amount of interest paid over the life of the Note.

Franchisees should be aware of this provision and carefully consider its implications for their cash flow and financial planning. It is advisable to seek clarification from Americas Best Value Inn regarding their typical practices for applying partial payments and to negotiate terms that provide more predictability and control over payment allocation. Understanding these terms is crucial for managing the financial aspects of the franchise agreement effectively.

This type of clause is not uncommon in financing agreements, as it provides the lender with flexibility in managing payments and protecting their interests. However, franchisees should ensure they fully understand the potential impact and negotiate for terms that are as favorable as possible.