What business risk does Delta Hotels By Marriott franchisee agree to when entering the agreement?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
A. NO RELIANCE. IN ENTERING THIS AGREEMENT, FRANCHISEE REPRESENTS AND WARRANTS THAT IT DID NOT RELY ON, AND NEITHER FRANCHISOR NOR ANY OF ITS AFFILIATES HAS MADE, ANY PROMISES, REPRESENTATIONS, WARRANTIES OR AGREEMENTS RELATING TO THE FRANCHISE, THE HOTEL, OR THE APPROVED LOCATION OR THE SYSTEM, UNLESS CONTAINED IN THIS AGREEMENT.
- B. BUSINESS RISK. FRANCHISEE AGREES THAT THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT INVOLVES SUBSTANTIAL BUSINESS RISK, IS A VENTURE WITH WHICH FRANCHISEE HAS RELEVANT EXPERIENCE AND ITS SUCCESS IS LARGELY DEPENDENT ON FRANCHISEE'S ABILITY AS AN INDEPENDENT BUSINESS. FRANCHISOR DISCLAIMS THE MAKING OF, AND FRANCHISEE AGREES IT HAS NOT RECEIVED, ANY INFORMATION, WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED, AS TO THE POTENTIAL REVENUES, PROFITS OR SUCCESS OF SUCH BUSINESS VENTURE. IF,
PRIOR TO THE EFFECTIVE DATE, FRANCHISOR HAS FURNISHED ANY HISTORICAL PERFORMANCE DATA OR PROJECTIONS WITH RESPECT TO THE HOTEL IN CONNECTION WITH THE POSSIBILITY OF FRANCHISOR OR ITS AFFILIATES MANAGING THE HOTEL (AS OPPOSED TO GRANTING A FRANCHISE TO FRANCHISEE), FRANCHISEE ACKNOWLEDGES AND AGREES THAT SUCH DATA AND PROJECTIONS ARE NOT APPLICABLE TO A FRANCHISED SYSTEM HOTEL AND THAT IT HAS NOT RELIED THEREON IN ENTERING INTO THIS AGREEMENT. FRANCHISOR WILL NOT INCUR ANY LIABILITY FOR ANY ERROR, OMISSION OR FAILURE CONCERNING ANY ADVICE, TRAINING OR OTHER ASSISTANCE FOR THE HOTEL PROVIDED TO FRANCHISEE, INCLUDING FINANCING, DESIGN, CONSTRUCTION, RENOVATION OR OPERATIONAL ADVICE.
Source: Item 23 — RECEIPTS (FDD pages 134–251)
What This Means (2025 FDD)
According to the 2025 FDD, a Delta Hotels By Marriott franchisee acknowledges and accepts substantial business risk when entering into the franchise agreement. The franchisee represents that they possess relevant experience for this business venture and understands that the success of the business is largely dependent on their own capabilities as an independent operator. Delta Hotels By Marriott explicitly disclaims providing any guarantees or warranties, whether express or implied, regarding potential revenues, profits, or the overall success of the business.
Delta Hotels By Marriott also clarifies that any historical performance data or projections provided prior to the effective date of the agreement, particularly those related to the possibility of Delta Hotels By Marriott or its affiliates managing the hotel, are not applicable to a franchised system hotel. The franchisee agrees that they have not relied on such data when deciding to enter into the agreement. This reinforces that the franchisee is taking on the risk of the business's performance.
Furthermore, Delta Hotels By Marriott will not be held liable for any errors, omissions, or failures related to advice, training, or other assistance provided to the franchisee. This includes advice related to financing, design, construction, renovation, or operations. This provision emphasizes that the franchisee is responsible for making their own business decisions and cannot hold Delta Hotels By Marriott accountable for the outcome of those decisions. This is a common clause in franchise agreements, as the success of the franchise often depends on the franchisee's management and execution.