Under what circumstances related to termination of the agreement would an Atwell Suites franchisee be required to pay liquidated damages?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ocument. | | u. | N/A | | | Dispute resolution by | | | | arbitration or mediation | | | | v. Choice of forum | License: 13.B | Association with Holiday in Georgia permits, but does not require all suits to be filed in Georgia, subject to state law. | | w. | License: 13.B | Georgia law applies, subject to state law. | | Choice of law | | |
NOTES:
Note 1: Termination of License by Holiday for Breach of Obligations Before Holiday Authorizes you to Use the Brand System at your Hotel: If Holiday terminates your License due to your breach of any of your obligations under the License before Holiday authorizes you to use the Brand System at the Hotel (for example, due to your failure to perform the construction, upgrading and renovation work described in Attachment "B" of the License), then you must pay Holiday a lump sum equal to the monthly average of all amounts that would have been payable to Holiday under paragraphs 3.B(3) through (6) of the License assuming the Hotel had collected Gross Suites Revenue based on the average daily revenue per available room for all of Holiday's All Suites Hotels (i.e., Hotels operating under the Staybridge Suites, Candlewood Suites or Atwell Suites® brands) in the United States for the previous twelve months, as determined by Holiday, multiplied by the greater of (a) six or (b) the number of full and partial months from the Term Commencement Date to the termination date of the License.
Termination of License by Holiday for Breach of Obligations After Holiday Authorizes You to Use the Brand System at your Hotel: If Holiday terminates the License under paragraphs 11.B or 11.C (see table, sections g and h), you must promptly pay Holiday (as liquidated damages for the premature termination only, and not as a penalty nor as damages for breaching the License or in lieu of any other payment) a lump sum equal to the total amounts required under paragraphs 3.B(3) through (4) of the License during the 36 calendar months of operation preceding the termination; or whatever shorter period equals the unexpired License term at the time of termination; or if your Hotel has not been in operation in the Brand System for 36 months, the greater of: (1) 36 times the monthly average of these amounts for the period during which the Hotel has been in operation in the Brand System, or (2) 36 times these amounts due for the one month preceding such termination.
ITEM 18 PUBLIC FIGURES
Holiday does not use any public figures to promote the sale of Licenses. Public figures may appear in consumer marketing for the Brand System.
ITEM 19
FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a licensor to provide information about the actual or potential financial performance of its licensed and/or licensor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a licensor provides the actual records of an existing outlet you are considering buying; or (2) a licensor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.
Holiday does not make any representations about an Atwell Suites® licensee's future financial performance or the past financial performance of company-owned or licensed outlets. Holiday also does not authorize its employees or representatives to make any such representations either orally or in writing.
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 92–95)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, there are several circumstances under which a franchisee may be required to pay liquidated damages upon termination of the license agreement. If Holiday (presumably referring to IHG, the parent company) terminates the license due to the franchisee's breach of obligations before the franchisee is authorized to use the Brand System at their hotel, the franchisee must pay a lump sum. This sum is calculated as the monthly average of amounts payable to Holiday under specific paragraphs of the license, assuming the hotel had collected Gross Suites Revenue based on the average daily revenue per available room for all of Holiday's All Suites Hotels in the United States for the previous twelve months. This amount is then multiplied by the greater of six or the number of full and partial months from the Term Commencement Date to the termination date of the License. This applies, for example, if the franchisee fails to perform required construction, upgrades, or renovations.
Additionally, if Holiday terminates the license under specific paragraphs related to termination with cause, the franchisee must promptly pay Holiday liquidated damages. These damages are calculated as a lump sum equal to the total amounts required under specific paragraphs of the license during the 36 calendar months of operation preceding the termination. If the hotel has been in operation for less than 36 months, the damages are calculated as the greater of 36 times the monthly average of these amounts for the period the hotel has been in operation, or 36 times these amounts due for the one month preceding termination.
The FDD also indicates that Holiday may terminate the license with cause, and the franchisee will pay liquidated damages if Holiday terminates under specific paragraphs of the agreement. These termination clauses are related to defaults that can be cured and non-curable defaults, as defined in the license agreement. Non-curable defaults include events such as bankruptcy, judgments exceeding $50,000 that are not dismissed, trademark misuse, loss of property possession, dissolution of the licensee entity, failure to operate the hotel as an Atwell Suites brand, violation of licensor proprietary rights, unapproved transfers, conviction of a felony, false books and records, failure to comply with safety, security, or privacy standards, condemnation or casualty where the hotel does not reopen when required, unauthorized use of marks, and refusal to allow inspection or audit.