What is the 'Reimbursement Obligation' for Delta Hotels By Marriott franchisees, as defined in this agreement?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 6: Obligations of Franchisee.** Franchisee agrees to the following:]
- e.
Franchisee acknowledges that Marriott may be damaged in several ways upon termination of this Agreement pursuant to Paragraph 7.b or Paragraph 7.c (an "Event Termination").
Franchisee acknowledges that certain costs and expenses related to the Hotel's participation in the Programs, as allocated to Franchisee pursuant to Paragraph 3 and Attachment A (including all of those costs allocated pursuant to Exhibits attached thereto), have already been incurred by Marriott or accrued by Franchisee prior to the date of the Event Termination ("Prior Costs").
Furthermore, certain costs and expenses related to the Hotel's participation in the Programs, as allocated or allocable to Franchisee pursuant to Paragraph 3 and Attachment A and the Exhibits thereto, to be incurred by Marriott or accrued by Franchisee, after the Event Termination ("Future Costs") may not be recoverable.
In the event of an Event Termination, Marriott shall be entitled to recover from Franchisee, and Franchisee shall be obligated to promptly pay to Marriott, no later than the date of termination of this Agreement, the Prior Costs and Future Costs, as reasonably determined by Marriott.
The parties agree that such payment is not
a penalty and represents a reasonable estimate of just and fair compensation of Marriott for the damages that it would suffer for an Event Termination The parties agree that it is reasonable for Marriott to include in the calculation of Future Costs those costs anticipated to be allocated to the Hotel (pursuant to the methodology set forth in Exhibits attached hereto) for the remainder of the Initial Term or Renewal Term (as applicable) as calculated according to Marriott's most recent projection of such costs. Franchisee's obligation to pay the Prior Costs and Future Costs shall survive termination of this Agreement.
- **8.
[Item 6: Obligations of Franchisee.** Franchisee agrees to the following:]
- I. Promptly, upon notice, (i) Franchisee shall reimburse Marriott for any Loss related to any Employment Based Claim of Service Provider for which Marriott shall be indemnified by Franchisee pursuant to Section 4.B, and (ii) Marriott shall reimburse Franchisee for any Loss related to any Employment Based Claim of the Service Provider for which Franchisee shall be indemnified by Marriott pursuant to Section 4.A.
[Item 6: Obligations of Franchisee.** Franchisee agrees to the following:]
- **14.
Attorneys' Fees.** In the event any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement or the breach thereof, results in arbitration or litigation, the prevailing party in such proceedings shall be entitled to recover from the losing party reasonable expenses, attorneys' fees and costs.
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, there are a few instances where a franchisee may be obligated to reimburse Marriott.
First, if there is an 'Event Termination' of the agreement (due to specific termination clauses), Delta Hotels By Marriott is entitled to recover from the franchisee both 'Prior Costs' (costs already incurred by Marriott or accrued by the franchisee before the termination date) and 'Future Costs' (costs to be incurred by Marriott or accrued by the franchisee after the termination). These Future Costs can include costs anticipated to be allocated to the hotel for the remainder of the term, based on Marriott's projections. This reimbursement is intended to compensate Marriott for damages suffered due to the early termination and is not considered a penalty.
Second, Delta Hotels By Marriott franchisees are obligated to promptly reimburse Marriott for any Loss related to any Employment Based Claim of a Service Provider for which Marriott is indemnified by the franchisee, according to Section 4.B of the agreement. Conversely, Marriott will reimburse the franchisee for any Loss related to any Employment Based Claim of the Service Provider for which the franchisee is indemnified by Marriott, as per Section 4.A.
Finally, if any legal dispute arises from the agreement, the prevailing party is entitled to recover reasonable expenses, attorneys' fees, and costs from the losing party. This could result in a reimbursement obligation depending on the outcome of any arbitration or litigation.