Can the Atwell Suites Participating Property assign its Participation Agreement to another party?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Assignment.
Participating Property may not assign this Participation Agreement, nor any of its rights and/or obligations under it, nor purport to do so, nor hold any such rights in trust for any other person except to the extent required under Section 5, "Obligations", above.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 FDD, the Participating Property for Atwell Suites cannot assign the Participation Agreement to another party. The agreement specifies that the Participating Property is restricted from assigning the agreement, its rights, or obligations to another person. An exception exists if it's required under Section 5, "Obligations."
This restriction on assignment means that if a Participating Property wants to transfer its rights or obligations under the Participation Agreement, it is generally prohibited unless it falls under the specific exception mentioned in Section 5. This clause protects IHG's interests by ensuring that the party responsible for fulfilling the agreement's terms remains consistent unless explicitly allowed.
However, in the event of the sale of the Participating Property to a third party, the seller must make commercially reasonable efforts to ensure that the purchaser understands and assumes the remaining term of the Participation Agreement. If the seller fails to notify the purchaser, or the purchaser does not agree to assume the remaining term, the seller acknowledges and agrees to assume any charges and fees associated with early termination of the Participation Agreement, which will not exceed the prorated amount of fees remaining on the 36-month term.