When is the Development Incentive typically funded for a Baymont Inn Suites franchise?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
m of the Franchise Agreement for the Facility or a Transfer occurs. The Development Incentive is typically funded shortly after the Facility's Opening Date, Subsequently, at each anniversary of the Facility's Opening Date, 1/20th of the original amount of the Development Incentive is forgiven without payment (based on the Term of the Franchise Agreement) such that the Development Incentive Note is fully forgiven at the end of the Term. If the franchise terminates or is transferred before the expiration of the Term, you must repay the balance of the Development Incentive. The Development Incentive Note bears no interest except in the case of default, in which case the interest rate will be 18% per annum (1.5% per month) or the highest rate allowed by law. If you must repay the balance of the Development Incentive and fail to make any required payment on time, we may demand that you immediately pay the Development Incentive in full. Default under the Development Incentive Note will constitute a default under the Franchise Agreement. We do not typically require any additional security for the Development Incentive Note, but reserve the right to do so in certain circumstances depending on the amount of the Development Incentive and the creditworthiness of you and your principals. The Development Incentive Note may be prepaid at any time without penalty.
Source: Item 10 — FINANCING (FDD pages 59–61)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the Development Incentive is typically funded shortly after the Facility's Opening Date. This incentive is structured as a loan that does not require repayment unless the franchise terminates before the end of the Franchise Agreement's term or a transfer occurs.
The Development Incentive is disbursed after several conditions are met. These include passing a final credit review with no material adverse changes, the Facility officially opening with Baymont Inn Suites's consent, completion of all required pre-opening improvements, payment of the Initial Fee, and being in good standing under the Franchise Agreement and all ancillary agreements. Any other pre-requisites for disbursement agreed upon in the Franchise Agreement must also be completed.
Furthermore, at each anniversary of the Facility's Opening Date, 1/20th of the original Development Incentive amount is forgiven without payment, based on the term of the Franchise Agreement. This means the Development Incentive Note is fully forgiven at the end of the term. However, if the franchise terminates or is transferred before the term expires, the franchisee must repay the remaining balance of the Development Incentive.
The Development Incentive Note typically bears no interest, except in the case of default, where the interest rate will be 18% per annum (1.5% per month) or the highest rate allowed by law. Baymont Inn Suites does not typically require additional security for the Development Incentive Note but reserves the right to do so depending on the incentive amount and the creditworthiness of the franchisee and their principals. The Development Incentive Note may be prepaid at any time without penalty.