What happens to the agreement if the Delta Hotels By Marriott Franchise Agreement is terminated?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
- d.
This Agreement will immediately terminate upon termination of the Franchise Agreement; except in the event that Marriott consents to or approves the transaction (including a sale of the Hotel or other transfer requiring the consent of Marriott) pursuant to which the Franchise Agreement is terminated, in which case this Agreement may be assigned as set forth in any such consent or approval.
- e.
Franchisee acknowledges that Marriott may be damaged in several ways upon termination of this Agreement pursuant to Paragraph 7.b or Paragraph 7.c (an "Event Termination").
Franchisee acknowledges that certain costs and expenses related to the Hotel's participation in the Programs, as allocated to Franchisee pursuant to Paragraph 3 and Attachment A (including all of those costs allocated pursuant to Exhibits attached thereto), have already been incurred by Marriott or accrued by Franchisee prior to the date of the Event Termination ("Prior Costs").
Furthermore, certain costs and expenses related to the Hotel's participation in the Programs, as allocated or allocable to Franchisee pursuant to Paragraph 3 and Attachment A and the Exhibits thereto, to be incurred by Marriott or accrued by Franchisee, after the Event Termination ("Future Costs") may not be recoverable.
In the event of an Event Termination, Marriott shall be entitled to recover from Franchisee, and Franchisee shall be obligated to promptly pay to Marriott, no later than the date of termination of this Agreement, the Prior Costs and Future Costs, as reasonably determined by Marriott.
The parties agree that such payment is not
a penalty and represents a reasonable estimate of just and fair compensation of Marriott for the damages that it would suffer for an Event Termination The parties agree that it is reasonable for Marriott to include in the calculation of Future Costs those costs anticipated to be allocated to the Hotel (pursuant to the methodology set forth in Exhibits attached hereto) for the remainder of the Initial Term or Renewal Term (as applicable) as calculated according to Marriott's most recent projection of such costs. Franchisee's obligation to pay the Prior Costs and Future Costs shall survive termination of this Agreement.
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 agreement with Marriott will immediately terminate upon the termination of the Franchise Agreement. However, there is an exception if Marriott consents to or approves a transaction that leads to the termination of the Franchise Agreement, such as a sale of the hotel or another transfer that requires Marriott's consent. In such cases, the agreement may be assigned as specified in Marriott's consent or approval.
Delta Hotels By Marriott specifies that if the agreement is terminated due to franchisee default or franchisee termination, Marriott may be damaged. In such an event, Marriott is entitled to recover from the franchisee any prior costs and future costs associated with the hotel's participation in the Programs, as reasonably determined by Marriott. These costs include those already incurred or accrued before the termination date, as well as those expected to be incurred after the termination.
The Delta Hotels By Marriott FDD states that the franchisee's obligation to pay these prior and future costs will survive the termination of the agreement. This means that even after the agreement is terminated, the franchisee remains responsible for settling these outstanding financial obligations with Marriott. The FDD clarifies that this payment is not considered a penalty but rather a reasonable estimate of the compensation Marriott is due for damages resulting from the termination.