In the context of Atwell Suites franchise transfers, what does IHG consider to be an 'Equity Interest'?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
nsfer"), 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.
- (1) The term "Equity Interest" means all forms of ownership, including, without limitation, membership, stock, partnership or any other form of equity interests in an Entity or property, both legal and beneficial, voting and non-voting, including stock interests, partnership interests, limited liability company interests, joint tenancy interests, leasehold interests, proprietorship interests, trust beneficiary interests, proxy interests, power-of-attorney interests, and all options, warrants, and any other forms of interest evidencing ownership or Control. References in this License to "publicly traded Equity Interests" shall mean any Equity Interests which are traded on any securities exchange or are quoted in any publication or electronic reporting service maintained by the National Association of Securities Dealers, Inc. or any of its successors.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, IHG defines "Equity Interest" broadly regarding franchise transfers. It encompasses all forms of ownership in an entity or property, whether legal or beneficial, voting or non-voting. This includes various types of interests such as stock, partnership, limited liability company interests, joint tenancy, leasehold, proprietorship, trust beneficiary, proxy, and power-of-attorney interests. The definition also extends to all options, warrants, and any other forms of interest that evidence ownership or control.
This comprehensive definition means that any type of ownership stake in the Atwell Suites franchise, no matter how small or indirect, falls under the umbrella of "Equity Interest." This is important because any transfer of such an interest, whether through sale, assignment, or other means, is subject to the transfer provisions outlined in the franchise agreement. IHG retains significant control over who can own or control an Atwell Suites franchise.
For a prospective Atwell Suites franchisee, this means that any change in ownership structure, even a minor one, could trigger the need for franchisor approval. This could involve providing detailed information about the proposed transferee, meeting IHG's ownership criteria, and potentially executing additional agreements. The franchisor's broad definition of "Equity Interest" ensures that it has the ability to carefully vet any potential new owners or investors in the franchise, safeguarding the brand and the interests of other franchisees.
IHG's judgment is final if there is any question as to the definition of Equity Interests or as to the computation of relative Equity Interests, including transfers of Equity Interests. The principal considerations are:
- direct and indirect power to exercise control over the affairs of Licensee;
- direct and indirect right to share in Licensee's profits; and
- amounts directly or indirectly exposed at risk in Licensee's business.