Can an owner of a Delta Hotels By Marriott hotel pledge the Franchise Agreement as collateral?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
Owner and each Interestholder in Owner may grant a lien or other security interest in the Hotel or the revenues of the Hotel, or pledge Ownership Interests in Owner or a Control Affiliate as collateral for the financing of the Hotel. If any Person exercises its rights under such lien, security interest or pledge, Franchisor will have the rights under Section 8.1 of this Agreement and Section 19.1 of the Franchise
Agreement. Owner will not pledge this Agreement as collateral or grant a security interest in this Agreement.
Source: Item 11 — FINANCING OF THE HOTEL (FDD pages 259–279)
What This Means (2025 FDD)
According to the 2025 Delta Hotels By Marriott Franchise Disclosure Document, an owner cannot pledge the Franchise Agreement as collateral. However, the owner and each interest holder in the owner can grant a lien or other security interest in the hotel or the revenues from the hotel. They can also pledge ownership interests in the owner or a control affiliate as collateral for financing the hotel.
If a person exercises their rights under such a lien, security interest, or pledge, Delta Hotels By Marriott retains specific rights as outlined in Section 8.1 and Section 19.1 of the Franchise Agreement. This is a common practice to protect the franchisor's interests and brand standards, even when the hotel owner seeks financing using the hotel's assets.
This provision clarifies the permissible methods of securing financing for the hotel while protecting Delta Hotels By Marriott's interests in the event of a default by the owner. Prospective franchisees should understand these conditions and how they might affect their financing options and obligations under the Franchise Agreement.