What is the relationship between the Three-Party Agreement and the undertakings by the Lender and Franchisee for a Baymont Inn Suites franchise?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Franchisee also consents to the transmittal of any and all information between Lender and Company from time to time about Franchisee's account with Company, the status of the Primary Agreement, the franchise relationship, and the loan or loans from Lender.
9. No Assignment by Lender; Replacement Comfort Lender.
- 9.1. Lender shall assign this Agreement to any (i) affiliate of Lender that acquires the Lender's interest in the mortgage or other loan to which this Agreement relates; and (ii) entity that acquires the Lender (or is the survivor of any merger or similar reorganization of the Lender), provided, in each case, that Lender need not assign this Agreement if it retains the right and obligation to service the loan on behalf of its successor-in-interest. Lender shall notify Company of such an assignment within fifteen (15) days following the assignment.
- 9.2. Company will issue a replacement three-party agreement, substantially similar in form to the three-party agreement then-disclosed in Company's franchise disclosure document, if (a) Lender (i)
appoints a third-party servicing agent to service the loan; (ii) transfers the loan to a successor mortgagee that is a financial institution in the business of routinely financing real estate transactions, or (iii) designates a trustee of a trust established in connection with the securitization of the loan; provided, in each case, that such transferee is reasonably acceptable to Company; and (b) Company receives a written request to issue a replacement three-party agreement within 30 days of the date of such appointment or transfer. Company reserves the right to charge an administrative fee for such replacement three-party agreement. Any such replacement three-party agreement shall supersede and replace this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 96–97)
What This Means (2025 FDD)
According to the 2025 Baymont Inn Suites Franchise Disclosure Document, the Three-Party Agreement (TPA) formalizes the relationship between the lender, franchisee, and franchisor when a franchisee seeks financing. The TPA outlines the conditions under which Baymont Inn Suites consents to the franchisee using the franchise agreement as collateral for a loan. This agreement is contingent upon specific undertakings by both the lender and the franchisee.
The franchisee's responsibilities include requesting the TPA to induce the lender to provide funds, understanding the conditions that apply to the TPA's issuance, and consenting to the sharing of information between the lender and Baymont Inn Suites regarding the franchisee's account, the status of the franchise agreement, the franchise relationship, and the loan. If the franchisee is not already party to a franchise agreement with Baymont Inn Suites, the issuance of the TPA is subject to the execution of a franchise agreement, payment of the initial fee, and receipt of other necessary documents.
Baymont Inn Suites will issue a replacement three-party agreement, substantially similar in form to the three-party agreement then-disclosed in Company's franchise disclosure document, if certain conditions are met by the lender. These conditions include the lender appointing a third-party servicing agent, transferring the loan to a successor mortgagee that is a financial institution, or designating a trustee of a trust established in connection with the securitization of the loan, provided such transferee is reasonably acceptable to Baymont Inn Suites. The company may charge an administrative fee for the replacement agreement, and any such replacement agreement supersedes the original agreement. The lender can assign the agreement to an affiliate that acquires the lender's interest in the loan or to an entity that acquires the lender, provided the lender retains the right to service the loan. The company must be notified of such assignment within 15 days.