What factors determine the guaranty requirements for a Delta Hotels By Marriott franchise?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
After a review of the financial information submitted with your application and a review of the ownership structure of the proposed franchisee, the hotel, and the real property on which the hotel will sit, we will determine guaranty requirements. If the franchisee is an entity, we may require the principals of the entity to sign a guaranty of the franchisee's obligations substantially in the form included in Exhibit C. In certain limited instances, we will accept the guaranty of an entity with substantial net worth instead of some or all of the principals of the franchisee. The primary determining factors will include: (i) the net worth and liquidity of the proposed guarantor; (ii) the credit and operating history of the proposed guarantor; and (iii) the debt structure applicable to the hotel. If you propose an entity to serve as the guarantor, you must submit financial statements for that entity. If we send to you a written notice of default or if we or our affiliates enter into any form of forbearance agreement with you, we may require you to provide a guaranty from a party acceptable to us to cover all of your obligations under the franchise agreement and related agreements.
If you do not own the hotel, we generally require the owner of the hotel to enter into an Owner Agreement substantially in the form included in Exhibit C.
If your hotel will be structured so that it involves residential, condominium, or multi-family units, we will require that you maintain ownership and control of all components of the hotel necessary for hotel management operations and may require you to maintain ownership and control of other facilities or common areas of the project that are not required by law to be owned or controlled by the unit owners.
If the licensee under a residential marketing license agreement or a multi-family component license agreement is an entity and not an individual, we generally require the principals of the entity to sign a guaranty of the licensee's obligations. In some cases, we will accept the guaranty of an entity with substantial net worth instead of some or all of the principals of the licensee. The primary determining factors will include: (i) the net worth and liquidity of the proposed guarantor; (ii) the credit and operating history of the proposed guarantor; and (iii) the debt structure applicable to the project. If you propose an entity to serve as the guarantor, you must submit financial statements for that entity.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 109–110)
What This Means (2025 FDD)
According to Delta Hotels By Marriott's 2025 Franchise Disclosure Document, the guaranty requirements are determined after a review of the financial information submitted with the application and a review of the ownership structure of the proposed franchisee, the hotel, and the real property. If the franchisee is an entity, Delta Hotels By Marriott may require the principals of the entity to sign a guaranty of the franchisee's obligations. In certain limited instances, Delta Hotels By Marriott will accept the guaranty of an entity with substantial net worth instead of some or all of the principals of the franchisee.
The primary determining factors for the guaranty include: (i) the net worth and liquidity of the proposed guarantor; (ii) the credit and operating history of the proposed guarantor; and (iii) the debt structure applicable to the hotel. If a prospective Delta Hotels By Marriott franchisee proposes an entity to serve as the guarantor, they must submit financial statements for that entity.
Delta Hotels By Marriott may also require a guaranty from a party acceptable to them to cover all obligations under the franchise agreement and related agreements if they send a written notice of default or if they or their affiliates enter into any form of forbearance agreement with the franchisee. If the franchisee does not own the hotel, Delta Hotels By Marriott generally requires the owner of the hotel to enter into an Owner Agreement. These factors ensure that Delta Hotels By Marriott has sufficient financial security and recourse in case of default or other issues with the franchise.
For residential, condominium, or multi-family unit structures, Delta Hotels By Marriott requires the franchisee to maintain ownership and control of all components of the hotel necessary for hotel management operations and may require maintaining ownership and control of other facilities or common areas of the project that are not required by law to be owned or controlled by the unit owners. If the licensee under a residential marketing license agreement or a multi-family component license agreement is an entity and not an individual, Delta Hotels By Marriott generally requires the principals of the entity to sign a guaranty of the licensee's obligations. In some cases, Delta Hotels By Marriott will accept the guaranty of an entity with substantial net worth instead of some or all of the principals of the licensee. The primary determining factors will include: (i) the net worth and liquidity of the proposed guarantor; (ii) the credit and operating history of the proposed guarantor; and (iii) the debt structure applicable to the project. If you propose an entity to serve as the guarantor, you must submit financial statements for that entity.