Does Delta Hotels By Marriott have any restrictions on assigning the franchise agreement to an affiliate?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
| l. | Franchisor approval of transfer by franchisee | Sections 17.1 and 17.4 | Transfers of the franchise agreement, the hotel, and controlling ownership interests in you or your control affiliate require our consent. Transfers of passive investor interests in you and transfers to affiliates generally do not require our consent if certain requirements are met. | | | PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY1 | |----|-------------------------------------------------------------------------|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | m. | Conditions for franchisor approval of transfer | Section 17.4 | You must provide us with information about the transferee and pay us the property improvement plan fee. The transferee must submit an application, pay us the application fee, satisfy our then-current owner qualifications (including its interestholders not having been convicted of a serious crime or engaged in certain adverse conduct or been a party to litigation with us), retain a qualified management company, sign a new franchise agreement that will require payment of the then-current fees and upgrade of the hotel to our current standards. The duration of such new franchise agreement will expire on or after the last day of the existing franchise agreement. You must pay all amounts owed to us and sign a release. If we engage outside counsel in connection with the transaction, we will require that our outside counsel fees be paid. In addition, the transferee must be in good financial status, there must not be an uncured breach of the franchise agreement, and the hotel must be in good standing under our quality assurance program. If the transferee is a Competitor, we have certain additional rights (see n. below).6 |
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 111–120)
What This Means (2025 FDD)
According to Delta Hotels By Marriott's 2025 Franchise Disclosure Document, a franchisee's ability to transfer the franchise agreement is subject to certain conditions. Specifically, transfers of the franchise agreement, the hotel, and controlling ownership interests in the franchisee or its control affiliate require Delta Hotels By Marriott's consent. However, transfers of passive investor interests in the franchisee and transfers to affiliates generally do not require consent if certain requirements are met.
Delta Hotels By Marriott outlines several conditions for franchisor approval of a transfer. The franchisee must provide information about the transferee and pay a property improvement plan fee. The transferee must submit an application, pay an application fee, and meet Delta Hotels By Marriott's then-current owner qualifications. These qualifications include ensuring that the transferee's interest holders have not been convicted of a serious crime, engaged in adverse conduct, or been involved in litigation with Delta Hotels By Marriott. The transferee must also retain a qualified management company and sign a new franchise agreement that requires payment of the then-current fees and upgrades the hotel to current standards. The term of the new franchise agreement must extend on or after the last day of the existing agreement.
Additional conditions include the franchisee paying all outstanding amounts owed to Delta Hotels By Marriott and signing a release. If Delta Hotels By Marriott engages outside counsel for the transaction, the franchisee will be responsible for those fees. Furthermore, the transferee must be in good financial standing, there must be no uncured breach of the franchise agreement, and the hotel must be in good standing under Delta Hotels By Marriott's quality assurance program. If the transferee is a competitor, Delta Hotels By Marriott retains certain additional rights.
These stipulations are typical in franchising, as franchisors want to maintain control over who operates their branded locations to protect brand standards and consistency. Prospective Delta Hotels By Marriott franchisees should carefully review Section 17 of the franchise agreement and Exhibit B, as referenced in the FDD, to fully understand the requirements and implications of transferring their franchise.