What is the Atwell Suites Equipment Lessee's obligation regarding the use of the equipment?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Company will reasonably request to ensure to Company's satisfaction the protection of Company's title to the Equipment and Company's interests and benefits under this Lease. Equipment Lessee will not transfer, pledge, lease, sell, hypothecate, mortgage, assign or in any other way encumber or dispose of any of the Equipment. THE PARTIES AGREE. AND EQUIPMENT LESSEE WARRANTS, THAT THE EQUIPMENT IS, AND WILL AT ALL TIMES REMAIN, PERSONAL PROPERTY OF COMPANY NOTWITHSTANDING THAT THE EQUIPMENT OR ANY PART THEREOF MAY NOW BE, OR HEREAFTER BECOME, IN ANY MANNER AFFIXED OR ATTACHED TO, OR EMBEDDED IN, OR PERMANENTLY RESTING UPON, REAL PROPERTY OR IMPROVEMENTS ON REAL PROPERTY. Equipment Lessee will not make any alterations, additions, or improvements to the Equipment without the prior written consent of Company. All parts added to the Equipment through alterations, repairs, additions or improvements will constitute accessions to, and will be considered an item of the Equipment and title to such will immediately vest in Company. Equipment Lessee agrees that Company may transfer or assign all or any part of Company's right, title and interest in or to any Equipment (in whole or in part) and this Lease, and any amounts due or to become due, to any third party ("Assignee") for any reason. Upon receipt of written notice from Company of such assignment, Equipment Lessee will perform all its obligations with respect to any such Equipment or the benefit of the applicable Assignee and, if so di
Assignee or to any other party designated in writing by such Assignee.
- USE OF EQUIPMENT. Equipment Lessee acknowledges that the rent does not fully compensate Company for its expenses concerning its research and development efforts designed to improve fountain equipment or in providing the Equipment to Equipment Lessee, and that Company provides the Equipment to Equipment Lessee for the purpose of dispensing products of The Coca-Cola Company. Therefore, Equipment Lessee agrees that if the Equipment is a dispenser, then the Equipment will be used for the purpose of dispensing fountain beverage products of The Coca-Cola Company, such as Coca-Cola®, diet Coke®
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the Equipment Lessee, which is the PSH Owner of each Corporate Hotel, has specific obligations regarding the use of equipment leased from the Company (identified as The Coca-Cola Company in this instance). If the equipment is a dispenser, it must be used to dispense fountain beverage products of The Coca-Cola Company, such as Coca-Cola®, diet Coke®, and Sprite®. However, this requirement does not apply within the State of Wisconsin. In Texas, a Permitted Exception is allowed as set forth in Section 2.2 of Exhibit A-1. The Equipment Lessee must also ensure that no product is dispensed that could affect the normal operation of the equipment. If a valve is used for a Competitive Beverage, Atwell Suites has the right to additional rent and charges for its costs of servicing such valve at a rate of not less than $300 per Dispenser per year, in accordance with the Company's Fair Share policy. If the equipment is a pump, it may only be used to dispense products of The Coca-Cola Company. If the equipment is neither a dispenser nor a pump, it must be used only in a location where fountain beverage products of The Coca-Cola Company are served and where no Sparkling or Juice is served that is a Product of PepsiCo.
These stipulations ensure that the equipment provided by Atwell Suites is used in a manner that aligns with the Company's business interests, primarily to promote and dispense their beverage products. The Fair Share policy and additional rent for using valves for competitive beverages are mechanisms to protect the Company's investment and ensure compliance with the intended use of the equipment. The Equipment Lessee must adhere to these guidelines to avoid additional charges and maintain the proper functioning of the equipment.
Furthermore, Atwell Suites retains the right to inspect the equipment and review records related to it during regular business hours, without disrupting the Equipment Lessee's operations. The Equipment Lessee is also obligated to promptly notify Atwell Suites of any changes in the location of the equipment, any alleged encumbrances, or any accidents resulting from its use or operation. This allows Atwell Suites to maintain oversight and control over the equipment, ensuring it is being used and maintained appropriately.
In practical terms, a prospective Atwell Suites franchisee needs to be aware of these restrictions and obligations regarding equipment use. They must ensure that their operations comply with the specified product dispensing requirements and be prepared for potential inspections and notifications. Understanding these terms is crucial for maintaining a good relationship with Atwell Suites and avoiding any penalties or disruptions to their business operations.