What does the Delta Hotels By Marriott franchisee covenant not to do against Marriott, its affiliates, and subsidiaries?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and Marriott hereby acknowledge their mutual understanding that success under the Programs is uncertain, and their mutual desire to ensure that these Programs not damage their existing relationship by resulting in contentious, distracting and expensive litigation.
Without limiting the generality of the foregoing, Franchisee further acknowledges that the covenants set forth in this Paragraph 12 were a material inducement to Marriott to enter into this Agreement, because of the impact of those covenants on the risks (and associated economic consequences) of proceeding with this Agreement.
In order to implement the foregoing acknowledgments, desires and understandings, Franchisee and Marriott for themselves and their respective affiliates and subsidiaries and the current and former officers, directors, shareholders, partners, employees, predecessors, successors, attorneys, agents, representatives, and assigns and all other persons
or entities acting on the behalf or claiming under any of the foregoing , hereby covenant not to bring any suit, action, or proceeding, or make any demand or claim of any type, against each other, or any of the foregoing entities or individuals, with respect to (i) the Shared Services, or (ii) the Programs, or (iii) this Agreement and any action contemplated by this Agreement, except that in the event that Franchisee fails to make payment of Prior Costs or Future Costs in accordance with Paragraph 7.e hereof, Marriott may bring an action for the sole purpose of collecting the payment of Prior Costs and/or Future Costs. Any party intended as a beneficiary of these covenants not to sue may plead or assert this Paragraph 12 as a complete defense and bar to any claim brought in contravention of this Paragraph 12 and, if any such claim is brought, the party asserting the claim shall indemnify, defend, and hold harmless any and all such beneficiary parties from and against any such claim.
Source: Item 6 — Obligations of Franchisee.** Franchisee agrees to the following: (FDD pages 363–513)
What This Means (2025 FDD)
According to the 2025 Delta Hotels By Marriott Franchise Disclosure Document, the franchisee agrees not to bring any suit, action, or proceeding, or make any demand or claim against Marriott, its affiliates, and subsidiaries. This covenant extends to their current and former officers, directors, shareholders, partners, employees, predecessors, successors, attorneys, agents, representatives, and assigns, as well as any other persons or entities acting on their behalf. This agreement covers matters related to (i) Shared Services, (ii) the Programs, and (iii) the Franchise Agreement itself, including any actions contemplated within it.
However, there is an exception to this covenant. Marriott retains the right to bring an action against the franchisee if the franchisee fails to make payment of Prior Costs or Future Costs as outlined in Paragraph 7.e of the agreement. This exception allows Marriott to pursue legal action solely for the purpose of collecting these unpaid costs.
The FDD emphasizes that this covenant not to sue was a significant factor in Marriott's decision to enter into the franchise agreement, highlighting its importance in managing the risks and economic consequences associated with the agreement. Any party who is intended to benefit from this covenant can use it as a complete defense against any claim brought in violation of it. Furthermore, if a claim is brought against a beneficiary party, the party asserting the claim is responsible for indemnifying, defending, and holding harmless the beneficiary parties from any such claim.
This "covenant not to sue" clause is a legal mechanism designed to minimize potential litigation between Delta Hotels By Marriott and its franchisees, fostering a more stable and predictable business relationship. Prospective franchisees should carefully consider the implications of this clause, as it significantly limits their ability to pursue legal action against Marriott except in specific circumstances related to unpaid costs.