Is the appointment of a receiver a curable or non-curable default for a Delta Hotels By Marriott franchise?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
| g. | "Cause" defined-curable defaults | Section 19.2 | You have 30 days to cure: failure to |
|---|---|---|---|
| timely start and complete | |||
| construction/conversion, | |||
| renovation/repair, or open the hotel; | |||
| failure to pay amounts due; default of | |||
| any other agreement(s) entered into | |||
| between us and you; if you or any | |||
| owner, officer, director, or employee is | |||
| convicted of a serious crime or is | |||
| engaged in conduct that may adversely | |||
| affect the hotel, the system, any | |||
| Company Brand Hotel or us, and such | |||
| person is not terminated from its | |||
| relationship with you; failure to | |||
| comply with the Standards; or any | |||
| other breach of the franchise | |||
| agreement or other agreements | |||
| between us and you that is not listed in | |||
| Section 19.1 (including, without | |||
| limitation, failure to procure and | |||
| maintain required insurance; failure to | |||
| indemnify us; or failure to comply | |||
| with condemnation/casualty | |||
| provisions). | |||
| h. | "Cause" defined-non-curable defaults | Sections 17.5.A, 19.1, and 21 | Non-curable defaults: insolvency; bankruptcy; appointment of receiver, trustee or liquidator; execution levied against you, the hotel or material real or personal property; foreclosure; becoming, or being under ownership or control of, a Restricted Person; violation of applicable law; becoming or being affiliated with a Competitor; transfers that do not comply with Section 17; dissolution or liquidation; loss of right to operate or possess the hotel or default or termination under a lease; cessation of operation as a System hotel; underreporting three or more times in 24 months; threat to public health or safety; failure to achieve performance thresholds under our quality assurance program; or disclosure of confidential information. |
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 111–120)
What This Means (2025 FDD)
According to Delta Hotels By Marriott's 2025 Franchise Disclosure Document, the appointment of a receiver is considered a non-curable default. This means that if a receiver is appointed to manage the franchisee's assets or business, Delta Hotels By Marriott has grounds to terminate the franchise agreement without providing an opportunity for the franchisee to correct the situation.
This provision protects Delta Hotels By Marriott from potential mismanagement or financial instability that could harm the brand's reputation or the operation of the hotel. The appointment of a receiver typically indicates severe financial distress or legal issues, which could negatively impact the hotel's performance and its ability to meet Delta Hotels By Marriott's standards.
For a prospective Delta Hotels By Marriott franchisee, this highlights the importance of maintaining financial stability and adhering to all legal and contractual obligations. Failure to do so could lead to the appointment of a receiver and the immediate termination of the franchise agreement, resulting in a loss of the business and the initial investment. This clause is a significant risk factor that potential franchisees should carefully consider before investing in a Delta Hotels By Marriott franchise.