What is the maturity date of the underlying loan for the largest loan guarantee that Atwell Suites has in place?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) also the fair value of the deferred compensation plan liabilities.
The level 3 investment was an addition during the prior year and the increase in 2024 reflects a further addition. There were no material transfers into and out of Level 3 during the year and there has been no change to the fair value.
Notes to Consolidated Financial Statements (continued)
15. Performance guarantees
From time to time, the Company will grant a performance guarantee to encourage property owners to enter into a management agreement. The Company has two outstanding guarantees at December 31, 2024 (three at December 31, 2023 and four at December 31, 2022), all provided by wholly owned subsidiaries of the Company.
Under these guarantees, amounts will become payabl
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the company sometimes guarantees loans to facilitate third-party ownership of hotels operating under a franchise or management agreement with them. As of December 31, 2024, the total guarantees in place were $30.7 million. The largest single guarantee that Atwell Suites has is $21.3 million, which was the same amount as of December 31, 2023. The loan underlying this largest guarantee is scheduled to mature in 2029.
This information is relevant for prospective franchisees as it provides insight into the financial commitments and risk exposure that Atwell Suites undertakes to support its franchisees. While the likelihood of payment under these guarantees is currently considered not probable, it represents a potential liability for the company. If Atwell Suites were required to make a payment under the guarantee, they have a cross-indemnity agreement to seek contributions from other partners involved.
Furthermore, two of these guarantees include covenants that provide assurance regarding the financial strength of Atwell Suites, and the company does not anticipate breaching these covenants. This suggests that Atwell Suites is actively managing its financial obligations and maintaining a stable financial position. Franchisees may want to inquire about the specific terms and conditions of these guarantees and covenants to fully understand the potential implications for Atwell Suites' financial stability and its ability to support its franchisees.