What is a prohibited action regarding the transfer of the Delta Hotels By Marriott franchise agreement?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.1 Franchisee's Transfer Rights. Franchisee agrees that its rights and duties in this Agreement are personal to Franchisee and that Franchisor entered into this Agreement in reliance on the business skill, financial capacity and character of Franchisee and its Affiliates and their principals.
Accordingly, any Transfer of the Hotel, or of any Ownership Interest in Franchisee, a Control Affiliate, or the Hotel, may be made only in accordance with this Section 17 (including Section 17.5) and only if such Transfer does not violate Section 17.6.
This Agreement may not be Transferred without Franchisor's prior consent.
17.2 Transfers Not Requiring Notice or Consent. As long as the following Transfers of Passive Investor Interests do not result in a change of Control of Franchisee, no notice to or consent by Franchisor is required:
A. Publicly-traded Securities.
Source: Item 23 — RECEIPTS (FDD pages 134–251)
What This Means (2025 FDD)
According to the 2025 Delta Hotels By Marriott Franchise Disclosure Document, the franchise agreement cannot be transferred without the prior consent of Delta Hotels By Marriott. Delta Hotels By Marriott emphasizes that the rights and duties within the agreement are specific to the franchisee. Delta Hotels By Marriott entered into the agreement based on their assessment of the franchisee's business skills, financial stability, and overall character, as well as those of their affiliates and principals.
Delta Hotels By Marriott requires adherence to Section 17, including Section 17.5, and compliance with Section 17.6 during any transfer of the hotel, ownership interest in the franchisee, a controlling affiliate, or the hotel itself. Section 17.6 states that no transfer of any Ownership Interest in Franchisee, the Hotel or any Marriott Agreement will be made to a Restricted Person or a Person that receives funding from a Restricted Person. Any such Transfer is a default under Section 19.1.B.
This stipulation ensures that Delta Hotels By Marriott maintains control over who becomes a franchisee and protects the brand's integrity by preventing transfers to entities that may not align with their standards or could pose a risk to the franchise system. Prospective franchisees should carefully review Section 17 of the Franchise Agreement to fully understand the conditions and restrictions related to transfers, ensuring they are aware of the process and potential limitations should they consider transferring their franchise in the future.