Does the Delta Hotels By Marriott definition of 'transfer' include the transfer of ownership interests?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY1 | |
|---|---|---|---|
| i. | Franchisee's obligations on termination/non-renewal | Sections 19.4 and 20 | Obligations include complete de identification of hotel; delivery to us of any intellectual property and other materials relating to the operation of the hotel under the System, including all customer information, operating instructions, software and accompanying documentation and other materials provided by us; advising customers of the removal of the hotel from the System in accordance with the standards; compliance with the provisions of the franchise agreement that survive termination; and payment of all amounts due (including liquidated damages and actual damages if termination was due to your default as well as any fees associated with removing the hotel from the System). |
| j. | Assignment of contract by franchisor | Section 17.7 | No restriction on our right to assign if transferee is an affiliate of ours or has acquired substantially all of our rights to the System and agrees to assume our obligations to you under the franchise agreement and is capable of performing those obligations. |
| k. | "Transfer" by franchisee-defined | Section 17.1 and Exhibit B | Includes transfer of the franchise agreement or the hotel or a transfer of any ownership interest in you or in any entity that controls you.5 |
| l. | Franchisor approval of transfer by franchisee | Sections 17.1 and 17.4 | Transfers of the franchise agreement, the hotel, and controlling ownership interests in you or your control affiliate require our consent. Transfers of passive investor interests in you and transfers to affiliates generally do not require our consent if certain requirements are met. |
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 definition of "transfer" by the franchisee includes the transfer of ownership interests. Specifically, it includes the transfer of the franchise agreement or the hotel, or a transfer of any ownership interest in the franchisee or in any entity that controls the franchisee. This definition is found in Section 17.1 and Exhibit B of the franchise agreement.
This means that if a franchisee wants to sell their franchise, sell the hotel itself, or transfer any portion of their ownership in the franchise to someone else, it is considered a transfer under the terms of the agreement. This also applies to the transfer of ownership in any entity that controls the franchisee, which could include a holding company or other controlling entity.
Delta Hotels By Marriott requires consent for transfers of the franchise agreement, the hotel, and controlling ownership interests in the franchisee or its control affiliate. However, transfers of passive investor interests in the franchisee and transfers to affiliates generally do not require consent if certain requirements are met. This distinction is important because it allows for some flexibility in ownership structure while still giving Delta Hotels By Marriott control over who operates its hotels.
Prospective franchisees should carefully review Section 17.1 and Exhibit B of the franchise agreement to fully understand what constitutes a transfer and what conditions apply to different types of transfers. Understanding these provisions is crucial for planning future business activities and potential exit strategies.