What constitutes a default under the MICC Documents for Delta Hotels By Marriott franchisees?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
- **12.
Default Provisions**: In addition to MICC's customary provisions concerning defaults, each of the following shall constitute a default under the MICC Documents:
(a) the failure to obtain MICC's approval in connection with any sale, transfer or encumbrance of the Project or any of the [Member / Partner] interests in Borrower;
(b) the occurrence of a default under, or a termination of, the Marriott Franchise Agreement; and
(c) the occurrence of a default beyond any applicable grace period in the performance of any of its obligations under the Mortgage, or any lien, encumbrance, security agreement or ground lease affecting the Project.
**9.
Default**.The occurrence of any of the following shall constitute an "Event of Default" hereunder:
(a) A failure by any Grantor, the Company or any Guarantor to observe or perform any obligation, covenant, condition, or agreement in this Security Agreement or any other MICC Loan Document that involves the payment of money, including without limitation, the occurrence of any event identified as one of the "Guaranteed Events" in section 1.3 of the Guaranty;
(b) A failure by any Grantor, the Company or any Guarantor to observe or perform any nonmonetary obligation, covenant, condition, or agreement in this Security Agreement or any other MICC Loan Document to be performed by any Grantor, the Company or any Guarantor, including without limitation, the occurrence of any event identified as one of the "Guaranteed Events" in section 1.3 of the Guaranty;
(c) If any Grantor, the Company or any Guarantor shall make an assignment for the benefit of creditors, or if any Grantor shall generally not be paying its debts as they become due;
(d) If a custodian, receiver, liquidator or trustee of all or any portion of the assets of any Grantor, the Company or any Guarantor shall be appointed, or if any Grantor, the Company or any Guarantor shall be adjudicated bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced by any Grantor, the Company or any Guarantor, or if any proceeding for the dissolution or liquidation of any Grantor, the Company or any Guarantor shall be instituted; provided, however, that such appointment, adjudication, petition or proceeding, if involuntary and not consented to by such Grantor, shall constitute an Event of Default only if not discharged, stayed or dismissed within ninety (90) calendar days;
(e) Any statement, report, certificate, representation or warranty made by any Grantor [or any member / partner / shareholder of a Grantor] in this Security Agreement, or by Grantor, the Company or any Guarantor in any other MICC Loan Document, or in connection with the Senior Loan is not true and correct in any material respect; or
Source: Item 6 — Obligations of Franchisee.** Franchisee agrees to the following: (FDD pages 363–513)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, several conditions can trigger a default under the MICC (Marriott International Credit Corporation) Documents for Delta Hotels By Marriott franchisees. These defaults relate to financial obligations, adherence to agreements, and the overall financial stability of the franchisee.
Specifically, a default occurs if the franchisee fails to obtain MICC's approval for any sale, transfer, or encumbrance of the project or any ownership interests in the borrowing entity. Furthermore, a default under, or termination of, the Marriott Franchise Agreement automatically constitutes a default under the MICC Documents. Additionally, failure to meet obligations under the mortgage, lien, encumbrance, security agreement, or ground lease affecting the project, beyond any applicable grace period, will also trigger a default.
Other events that constitute an Event of Default include failure to perform any obligation, covenant, condition, or agreement in the Security Agreement or any other MICC Loan Document that involves the payment of money, or any nonmonetary obligation. Moreover, if the franchisee makes an assignment for the benefit of creditors or is generally not paying its debts as they become due, it is considered a default. The appointment of a custodian, receiver, liquidator, or trustee for the franchisee's assets, or any bankruptcy or insolvency proceedings, can also lead to a default, unless such actions are involuntary and dismissed within 90 calendar days. Finally, any materially false statement, report, certificate, representation, or warranty made by the franchisee in connection with the Security Agreement or any other MICC Loan Document also constitutes an event of default.
These default provisions are important for prospective Delta Hotels By Marriott franchisees to understand, as they outline the circumstances under which MICC can take action to protect its interests, potentially impacting the franchisee's operation and ownership of the hotel. Franchisees should carefully review all MICC Loan Documents and ensure they can meet all obligations to avoid triggering a default.