What is the purpose of the Reserve account that a Delta Hotels By Marriott franchisee must establish?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
4.3 Periodic Renovations.
A. Replacement of FF&E. Franchisee will timely start and complete the periodic renovation of all Guestrooms and Public Facilities to Franchisor's satisfaction in accordance with Section 4.4 and the Standards, including replacing Soft Goods and Case Goods periodically as required by the Standards ("Periodic Renovations"). At the time of any replacement of FF&E, Franchisor may require Franchisee to upgrade the rest of the Hotel to conform to the Standards applicable to similarly situated System Hotels.
B. Reserve Account. Franchisee will fund the cost of all renovations at the Hotel. Franchisee will establish a reserve account at a financial institution (the "Reserve") so that funds are available to complete the Periodic Renovations.
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- The Reserve will be used only for renovations of Guestrooms and Public Facilities including replacement of Soft Goods and Case Goods. The Reserve will not be used for repairs or replacements to the structure of the Hotel building or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems, which structure and systems will be maintained in good condition with other funds.
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- Each month, Franchisee will transfer into the Reserve an amount equal to the percentage of Gross Revenues stated in Item 18 of Exhibit A applicable to such month. Such transfer will be made within 15 days after the end of each month.
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- At the end of each year, any amounts remaining in the Reserve will remain in the Reserve, and will not decrease the amount required to be deposited in the Reserve.
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Amounts required under Section 4.3.B.2 may be insufficient to maintain the Hotel in accordance with the Standards, and if so, Franchisee will provide additional funds to maintain the Hotel to the Standards.
Source: Item 23 — RECEIPTS (FDD pages 134–251)
What This Means (2025 FDD)
According to Delta Hotels By Marriott's 2025 Franchise Disclosure Document, franchisees are required to establish a reserve account to fund the cost of renovations to guestrooms and public facilities. This reserve, held at a financial institution, is specifically designated for periodic renovations, including the replacement of soft goods and case goods, ensuring the hotel maintains brand standards.
The funds in the Reserve account are explicitly for renovations of guestrooms and public facilities, covering items like soft goods and case goods. The Reserve account cannot be used for repairs or replacements to the structure of the hotel building or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems. The franchisee is responsible for maintaining the building structure and these systems using other funds.
Each month, the Delta Hotels By Marriott franchisee must transfer a percentage of Gross Revenues into the Reserve account, as specified in Item 18 of Exhibit A. This transfer must occur within 15 days after the end of each month. At the end of each year, any remaining amounts in the Reserve will stay in the account and will not reduce the required deposit amount for the following year. If the required monthly deposits are insufficient to maintain the hotel to Delta Hotels By Marriott's standards, the franchisee is responsible for providing additional funds.