Under what circumstances will the Reserve Account for an Atwell Suites franchise be fully funded immediately?

According to Atwell Suites's 2025 Franchise Disclosure Document, the Reserve Account must be fully funded immediately under specific circumstances. These circumstances include instances of fraud, suspected fraud, the occurrence of an Event of Default, or if any party provides notice of termination of the License Agreement.

This immediate funding requirement serves as a protective measure for Atwell Suites, ensuring funds are readily available to cover potential losses or liabilities arising from the franchisee's actions or business operations under those adverse conditions. An 'Event of Default' typically covers serious breaches of the franchise agreement, such as failure to meet brand standards, non-payment of fees, or other significant violations.

For a prospective Atwell Suites franchisee, this means understanding the conditions that trigger immediate funding of the Reserve Account is crucial. Franchisees should be aware that actions leading to fraud, default, or termination can have immediate financial consequences, requiring them to deposit the full Reserve Account amount without delay. This highlights the importance of adhering to the franchise agreement and maintaining ethical and compliant business practices to avoid triggering these conditions.

Beyond immediate funding, the FDD also specifies that the Reserve Account can be funded with three days' notice for any other reason. The Reserve Account may be funded by debits to the Settlement Account, collection of payments otherwise due to the franchisee, or a letter of credit.