What constitutes a 'Transfer' of interest in the Atwell Suites license that would be considered a material breach?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ownership of Licensee set forth on Attachment "A" is current, complete and accurate. Without limiting IHG's rights or Licensee's obligations under this paragraph, upon the reasonable request of IHG, Licensee will submit to IHG evidence, in form and substance satisfactory to IHG, confirming the ownership information set forth on Attachment "A". Upon any Transfer under this Paragraph 9 or otherwise permitted by IHG, Licensee will provide a list of the names and addresses of any new owners, members, partners or stockholders of Licensee and update Attachment "A".
Licensee understands and acknowledges that the rights and duties set forth in this License are personal to Licensee, and that IHG has granted this License in reliance on the business skill, financial capacity, and personal character of Licensee (if Licensee is a natural person), and upon the owners, members, partners or stockholders of Licensee (if Licensee is an Entity). Accordingly, neither Licensee nor any immediate or remote successor to any part of Licensee's interest in this License, nor any Person which directly or indirectly owns an Equity Interest (as that term is defined below) in Licensee or this License, may sell, assign, transfer, convey, exchange, pledge, mortgage, encumber, lease or give away (each of the foregoing shall describe a "Transfer"), any direct or indirect interest in this License or Equity Interest in Licensee, except as expressly provided in this License. Any purported Transfer, by operation of law or otherwise, of any interest, collaterally or otherwise, in this License or any Equity Interest in Licensee not in accordance with the provisions of this License, shall be null and void and shall constitute
a material breach of this License, for which IHG may terminate this License without opportunity to cure pursuant to paragraph 11. C of this License.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, a 'Transfer' of any direct or indirect interest in the license or equity interest in the licensee that isn't explicitly permitted by the license agreement is considered a material breach. This includes any sale, assignment, transfer, conveyance, exchange, pledge, mortgage, encumbrance, lease, or gift of the license or equity interest. This applies to the licensee, their successors, and any person owning an equity interest in the licensee.
Specifically, if a change of ownership application for a proposed new owner is not submitted or approved by IHG, and the hotel, hotel site, or any equity interest in the hotel or licensee is conveyed to the proposed new owner, it is considered an unauthorized transfer. This unauthorized transfer constitutes a material breach of the license agreement and an abandonment of the franchise. IHG has the right to exercise all remedies, including terminating the license.
For a prospective Atwell Suites franchisee, this means that any transfer of ownership or interest in the franchise must be done in accordance with the license agreement and with IHG's approval. Failure to obtain approval or any transfer not in compliance with the agreement could result in the termination of the franchise. This provision underscores the importance of carefully reviewing the transfer conditions outlined in the license agreement and adhering to IHG's procedures for any ownership changes.