What are the 'MICC Loan Documents' that Delta Hotels By Marriott franchisees are subject to?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
ncement Agreement shall accrue interest at an annual rate of interest equal to one-half of one percent (0.5%) above the rate of interest accruing on the Loan.
- (c) The Equity Pledge shall secure the reimbursement obligations to MICC for advances made by MICC to Lender under the Credit Enhancement Agreement. To the extent that advances made by MICC are not repaid in accordance with the terms of the Reimbursement Agreement, the Equity Pledge shall permit MICC to (i) receive any and all net operating income from the operation of the Project and/or sale, refinance or casualty proceeds that would otherwise be payable to Borrower and/or [Members /Partners] up to the amount due under the Reimbursement Agreement, and (ii) foreclose the [Member / Partner] pledges, which may result in MICC becoming the owner of the [Member / Partner] interests in Borrower.
- 9. MICC Documents: As a condition to MICC providing the Credit Enhancement to Lender, the following documents shall be delivered to MICC in form acceptable to MICC: (i) Reimbursement Agreement executed by Borrower and [Members / Partners]; (ii) Equity Pledge executed by the [Members / Partners]; (iii) UCC Financing Statements; (iv) Guaranty Agreement (limited to non-recourse carveout acts identified in the Guaranty Agreement)
- 10. Due on Sale / Due on Encumbrance: The MICC Documents contain due on sale and due on encumbrance clauses that prohibit the sale or encumbrance of the Project or any of the [Member / Partner] interests in Borrower without the prior written consent of MICC, which consent may be granted or withheld in MICC's sole discretion. The foregoing provisions of this paragraph notwithstanding, the Project may be encumbered by the Mortgage in favor of Lender.
- 11. Financial Statements: Borrower shall furnish to MICC quarterly and annual financial statements of Borrower and the [Members / Partners], annual income statements for the Project, and such other financial or operating information as MICC may from time to time reasonably require.
- 12. Default Provisions: In addition to MICC's customary provisions concerning defaults, each of the following shall constitute a default under the MICC Documents:
- (a) the failure to obtain MICC's approval in connection with any sale, transfer or encumbrance of the Project or any of the [Member / Partner] interests in Borrower;
- (b) the occurrence of a default under, or a termination of, the Marriott Franchise Agreement; and
- (c) the occurrence of a default beyond any applicable grace period in the performance of any of its obligations under the Mortgage, or any lien, encumbrance, security agreement or ground lease affecting the Project.
- **13.
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 MICC (presumably standing for Marriott International Credit Corporation) Loan Documents include several agreements that a franchisee must deliver to MICC as a condition of MICC providing credit enhancement to a lender. These documents are crucial for securing financing and ensuring compliance with MICC's requirements.
The specific MICC Loan Documents that Delta Hotels By Marriott franchisees must provide are: (1) a Reimbursement Agreement executed by the borrower and its members or partners, which outlines the terms for repaying any advances made by MICC to cure a default, including interest and fees; (2) an Equity Pledge executed by the members or partners, securing the reimbursement obligations to MICC for advances made under the Credit Enhancement Agreement; (3) UCC Financing Statements, which provide a public record of MICC's security interest in the franchisee's assets; and (4) a Guaranty Agreement, limited to non-recourse carveout acts, which specifies the conditions under which the guarantor is liable.
These documents also contain clauses regarding due on sale and due on encumbrance, preventing the sale or encumbrance of the project or any ownership interests without MICC's prior written consent. Furthermore, the Reimbursement Agreement stipulates that MICC's advances to the lender to cure a default must be repaid by the borrower, along with interest and other incurred fees, with interest accruing at 0.5% above the loan's interest rate. The Equity Pledge allows MICC to receive net operating income or foreclose on ownership interests if advances are not repaid, potentially leading to MICC becoming the owner of the borrower's interests. Franchisees are also obligated to furnish quarterly and annual financial statements to MICC, along with other financial or operating information as reasonably required, and must obtain MICC's approval for any sale, transfer, or encumbrance of the project or ownership interests.