Under the Atwell Suites agreement, what constitutes 'Control' of an entity?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding any other term or provision of this License to the contrary, neither this License nor any right or interest herein is assignable or transferable by Licensee.
If Licensee (i) receives an offer to purchase or lease the Hotel or any portion thereof, (ii) desires to sell or lease the Hotel or any portion thereof, or (iii) wishes to convey the Hotel, Hotel site, or any interest in the Hotel or Licensee, Licensee shall give prompt written notice thereof to IHG, stating the identity of the prospective transferee, purchaser or lessee and the terms and conditions of the conveyance, including a copy of any proposed agreement and all other information with respect thereto, that IHG may reasonably require.
Any (i) transfer of Equity Interests in an Entity (other than a transfer expressly permitted hereunder) or (ii) transfer of all or a material part of the Hotel or Hotel site (if the Hotel or Hotel site is owned directly or indirectly by Licensee or by a natural person or Entity that owns any Equity Interest in Licensee), to a new owner shall constitute a change of ownership requiring submittal of an application for a new license.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
Based on the 2025 Atwell Suites Franchise Disclosure Document, the franchise agreement stipulates that the license is not assignable or transferable by the franchisee. If the franchisee receives an offer to purchase or lease the hotel, desires to sell or lease the hotel, or wishes to convey the hotel, hotel site, or any interest in the hotel or the franchise itself, they must promptly notify IHG (InterContinental Hotels Group) in writing. This notice must include the identity of the prospective transferee, purchaser, or lessee, along with the terms and conditions of the proposed conveyance, including a copy of any proposed agreement and any other information IHG may reasonably require.
Furthermore, any transfer of equity interests in an entity (unless expressly permitted) or the transfer of all or a material part of the hotel or hotel site to a new owner will be considered a change of ownership. This applies if the hotel or hotel site is owned directly or indirectly by the franchisee or by a natural person or entity that owns any equity interest in the franchisee. Such a change in ownership necessitates the submission of an application for a new license.
Additionally, if the real property used for the Atwell Suites hotel's operation is owned directly or indirectly by the franchisee or an entity with equity interest in the franchisee, and there's a proposal to transfer all or a substantial part of that property to a third party, it constitutes a transfer requiring a new license agreement application. This requirement can be waived if the franchisee obtains IHG's prior written consent for the transaction. However, the franchisee can mortgage or grant a security interest in the real estate or other tangible assets of the hotel without IHG's consent, as long as it specifically excludes the franchise license itself.
In summary, 'control' in the context of the Atwell Suites franchise agreement relates to the ability to transfer ownership, lease, or convey the hotel, site, or the franchise license itself. Any significant change in ownership or control requires franchisor notification and may necessitate a new license agreement to ensure compliance with Atwell Suites's standards and protect the integrity of the franchise system.