What is the primary benefit of the Lender Notification Agreement for Baymont Inn Suites franchisees?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned duly-authorized representative of the Franchisee requests that Franchisor offer and issue a Lender Notification Agreement ("LNA") in favor of the "Lender" named below, the Certified Development Company ("CDC") (if any) identified below, and the United States Small Business Administration ("SBA") for the purpose of inducing Lender to loan funds (the "Loan") to Franchisee secured by Franchisee's interest in the Facility, under SBA's 7(a) or 504 loan programs. Lender, SBA, and, if applicable, CDC are referred to as the "Lender Group." Franchisee understands and agrees to the following conditions that apply to the offer and issuance of the LNA:
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- Franchisee authorizes Franchisor to release (and consents to the transmittal of) any and all information about Franchisee's account with Company, the status of the Franchise Agreement and the franchise relationship, the results of any quality assurance inspections, and guest complaints to Lender Group and its members' counsel (but Franchisor is under no obligation to do so). Franchisor may provide a copy of the Franchise Agreement to Lender Group, but is not required to do so, and Franchisee solely is responsible for ensuring that Lender has a full and complete copy of the Franchise Agreement if Lender Group requests the same. Franchisee represents and warrants to Franchisor that Franchisee has disclosed to Lender Group the current status of the Franchise Agreement and Franchisee's performance under the same, and that Franchisee will advise Lender Group of any changes in that status through the time of closing of the Loan.
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- Franchisee requests that upon receipt of this request form executed by Franchisee and its guarantor or guarantors, Franchisor prepare and offer to Lender Group its standard form of LNA, which will offer Lender the opportunity to cure Franchisee's defaults under the Franchise Agreement.
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- Franchisee acknowledges and confirms that Franchisor shall be indemnified and held harmless by Franchisee and each guarantor of Franchisee's obligations under the Franchise Agreement against any claim, liability, judgment, settlement, cause of action, and damage award
in favor of any member of Lender Group against Franchisor arising from or relating to Franchisee's breach of this request or the LNA; that such indemnification shall be subject to the indemnification provision of the Franchise Agreement; and that Franchisee's indemnification obligation represents partial consideration from Franchisee to Franchisor to review this request and to offer and issue the LNA. Franchisee acknowledges Franchisor is under no obligation to offer or issue the LNA, which inures to the primary benefit of Franchisee and its guarantor or guarantors.
Source: Item 23 — RECEIPTS (FDD pages 97–443)
What This Means (2025 FDD)
According to the 2025 Baymont Inn Suites FDD, the Lender Notification Agreement (LNA) primarily benefits the franchisee and their guarantors by potentially inducing a lender to provide financing. Specifically, the LNA is used to encourage a lender to loan funds to the franchisee, using the franchisee's interest in the facility as security, particularly under the SBA's 7(a) or 504 loan programs. The franchisee must request that Baymont Inn Suites offer the LNA to the lender.
To obtain the LNA, the franchisee authorizes Baymont Inn Suites to release information about the franchisee's account, the status of the Franchise Agreement, quality assurance inspection results, and guest complaints to the Lender Group and its counsel. Baymont Inn Suites is not obligated to do so. The franchisee also requests that Baymont Inn Suites offer its standard form of LNA to the Lender Group, which would allow the lender the opportunity to cure the franchisee's defaults under the Franchise Agreement.
However, the franchisee must indemnify Baymont Inn Suites against any claims arising from the franchisee's breach of the request or the LNA. The FDD states that Baymont Inn Suites is under no obligation to offer or issue the LNA. The franchisee's indemnification obligation is partial consideration for Baymont Inn Suites reviewing the request and offering the LNA. This agreement helps franchisees secure financing, but it also places certain obligations and potential liabilities on them.