To what extent is MICC subrogated to the rights of Lender for Delta Hotels By Marriott franchisees?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5. Subrogation. Obligors acknowledge that MICC is to be fully subrogated, to the extent of any Advance made by MICC, to the rights of Lender to any moneys paid or payable under the Senior Loan Documents and all security therefor under the Senior Loan Documents.
Obligors agree to execute such instruments, and to take such actions as MICC shall request to evidence such subrogation and to perfect the rights of MICC to the extent necessary to provide reimbursement under the Senior Loan Documents.
Source: Item 6 — Obligations of Franchisee.** Franchisee agrees to the following: (FDD pages 363–513)
What This Means (2025 FDD)
According to Delta Hotels By Marriott's 2025 Franchise Disclosure Document, MICC (presumably Marriott International Credit Corporation) is subrogated to the rights of the lender to the extent of any advance made by MICC under the Senior Loan Documents. This means that if MICC provides funds to cover a franchisee's obligations to their lender, MICC essentially steps into the lender's shoes, acquiring their rights to any money paid or payable under the loan agreement and any security associated with it.
This subrogation is a significant protection for MICC, ensuring they can recover funds they advance on behalf of the franchisee. To formalize this arrangement, the franchisee ('Obligors') must execute instruments and take actions to evidence MICC's subrogation and perfect MICC's rights to reimbursement under the Senior Loan Documents. This may involve signing additional legal documents or taking other steps to ensure MICC's claim is legally sound and enforceable.
For a prospective Delta Hotels By Marriott franchisee, this clause highlights the importance of understanding the financial obligations and the role of MICC in providing credit enhancement. It is crucial to recognize that MICC has a direct claim on the project's assets and cash flow to the extent of their advances, and franchisees must cooperate in establishing and maintaining MICC's secured position. This arrangement is typical in franchise agreements where a franchisor provides financial support or guarantees to lenders to facilitate franchisee financing.