If the franchisee is an entity, does Delta Hotels By Marriott require a guaranty?
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.
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, 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. This guaranty would be substantially in the form included in Exhibit C of the FDD. However, 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 factors that Delta Hotels By Marriott considers when determining guaranty requirements 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 franchisee proposes an entity to serve as the guarantor, they must submit financial statements for that entity.
Furthermore, if Delta Hotels By Marriott sends a written notice of default or if Delta Hotels By Marriott or its affiliates enter into any form of forbearance agreement with the franchisee, Delta Hotels By Marriott may require a guaranty from a party acceptable to them to cover all of the franchisee's obligations under the franchise agreement and related agreements. This ensures that Delta Hotels By Marriott has recourse to secure financial backing in case of operational or financial difficulties of the franchisee.