What is the consideration for the Three-Party Agreement for a Baymont Inn Suites franchise?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, representations, promises, covenants, and consideration set forth below, the sufficiency of which are hereby acknowledged as good, valuable, and adequate consideration, and intending to be legally bound, the Parties agree as follows:
The undersigned duly-authorized representative of Franchisee requests that Franchisor offer and issue a Three-Party Agreement ("TPA") in favor of the "Lender" named below for the purpose of inducing Lender to loan funds (the "Loan") to Franchisee secured by Franchisee's interest in the Facility. Franchisee understands and agrees to the following conditions that apply to the offer and issuance of the TPA. If Franchisee is not currently a party to a franchise agreement with Franchisor pertaining to the Facility, the offer and issuance of the TPA by Franchisor will be subject to the execution of such a franchise agreement (the franchise agreement, including all amendments and ancillary agreements, the "Franchise Agreement"); the payment of an initial fee or affiliation fee, as applicable; and Franchisor's receipt of such other documents Franchisor deems necessary to consummate the closing of the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD pages 96–97)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the Three-Party Agreement involves the lender, franchisee, and franchisor. The agreement outlines the lender's rights regarding the Franchise Agreement as collateral security for a loan provided to the franchisee.
The consideration for the Three-Party Agreement includes the mutual promises, covenants, and terms outlined within the agreement. The agreement explicitly states that the "sufficiency of which are hereby acknowledged as good, valuable, and adequate consideration". This indicates that all parties involved—the lender, franchisee, and Baymont Inn Suites—agree that the benefits and obligations detailed in the agreement are sufficient and valuable enough to warrant their participation.
Furthermore, if the franchisee is not already under a franchise agreement with Baymont Inn Suites for the facility, the execution of a franchise agreement, payment of the initial fee or affiliation fee, and receipt of necessary documents by Baymont Inn Suites are conditions for the Three-Party Agreement's offer and issuance. This ensures that the franchise arrangement is solidified before the lender's interests are formally integrated into the agreement.
In summary, the consideration includes the lender's provision of funds, the franchisee's granting of a security interest in the Franchise Agreement, and Baymont Inn Suites's consent to the collateral assignment, all bound by the terms and conditions specified in the Three-Party Agreement. This setup protects the interests of all parties involved in the financing and operation of the Baymont Inn Suites franchise.