[Item 7: Franchisor reserves the right to challenge the applicability of any law that declares provisions in the Agreement void or unenforceable.]

Notes to Financial Statements (continued) ($ in Thousands)

1. Description of Business

MIF, L.L.C. ("we" or the "Company") was formed on March 20, 2012 and is incorporated as a limited liability company ("LLC"), in the state of Delaware. The Company's sole member is Marriott International, Inc. ("Marriott" or the " Parent"). Upon the completion of its franchise disclosure document in 2012, the Company began offering franchises as a unit franchised business. Using the Marriott name, designs, and systems, licensed from Marriott, the Company sells Marriott-branded products and other items across various locations in the United States of America.

The Marriott franchise system is characterized by certain patents, trademarks, logos, operating systems, operating manuals, training, and distinctive hotel design and color schemes, and includes materials and methods for marketing and selling Marriott branded products and other products.

During the years ended December 31, 2024, 2023, and 2022, the Company transferred three, nine, and 12 franchise agreements to Marriott, respectively.

During the year ended December 31, 2024, the Company acquired and relicensed six franchise agreements from Marriott and its wholly owned subsidiary. The Company also entered into several new franchise agreements with franchisees in 2024.

Notes to Financial Statements (continued) ($ in Thousands)

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements present the results of operations, financial position, and cash flows of the Company in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates.

Revenue Recognition and Cost Reimbursements

[Item 7: Franchisor reserves the right to challenge the applicability of any law that declares provisions in the Agreement void or unenforceable.]

The related party transactions incurred interest at rates of 5.5%, 6.0%, and 3.0% for 2024, 2023, and 2022, respectively, based on the Internal Revenue Service Short-term Applicable Federal Rate. Interest income for the years ended December 31, 2024, 2023, and 2022 was $21,929, $20,097, and $8,441, respectively.

`

Notes to Financial Statements (continued) ($ in Thousands)

2. Summary of Significant Accounting Policies (continued)

The financial statements include an allocation of costs that are necessary to operate MIF, L.L.C. as if it were a stand-alone business. Payments for Marriott corporate administrative services on hotel development, hotel brand management, and internal and external professional services (treasury, legal, accounting, finance, human resources, and tax) are allocated and charged to the Company based on its proportional share of domestic administrative costs, which is determined by the percentage of domestic revenue earned by Marriott. The Company is charged a 1% markup on the final allocated amount. The Company believes the proportional cost allocation is an appropriate method of allocating costs from i t s Parent. Corporate allocation costs for the years ended December 31, 2024, December 31, 2023, and December 31, 2022 was $1,712, $1,284, and $1,396, respectively.

Royalties for licensing of the Marriott franchise system are charged to the Company at a rate of 2% of the underlying franchised properties' gross room revenue, and food and beverage revenue for full-service hotels. Additionally, with the expansion into franchising legacy Starwood brands in 2024, the Company is charged a rate of 98% of the net revenue collected from franchise fees. Other transactions with related parties predominantly include acquisitions of intangible assets, which were exchanged at Marriott's net book value of the underlying asset on the date of the acquisition, and other transactions carried out on a cost reimbursement basis.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 132)