Which sections of the Delta Hotels By Marriott Franchise Agreement are modified by Exhibit C?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
In order for the Hotel to continue to operate as a System Hotel, the Agreement is modified by, and the Hotel is to be renovated under, the terms of this Exhibit C and Section 4.4.
DRAFTING NOTE: Change references from "Franchise Agreement" on the cover page, table of contents, first page and signature page to "Relicensing Franchise Agreement," and delete "Chain Acquisition," "Construction Start Deadline," "Opening Deadline" and "Restricted Territory" from Exhibit B.
Franchisee acknowledges that the Hotel is to be renovated under the terms of this Exhibit C and Section 4.4:
1. Property Improvement Plan.
A. Property Improvement Plan. Based on a review of the Hotel, the property improvement plan prepared by Franchisor attached to this Exhibit C as Attachment Three outlines the conversion renovation requirements for the Hotel to become a System Hotel (the "PIP"). All such requirements must be completed by the Opening Date, unless otherwise noted in the PIP with respect to a particular requirement. All renovations, furniture, fixtures and equipment will conform to the then-current System specifications at the time such work is completed.
B. Material Change Review. If any material changes to the Hotel occur after the date stated in Item 19 of Exhibit A, then Franchisor may re-inspect the Hotel ("Material Change Review") and modify the PIP to address such material changes. Franchisee will complete the modified PIP, including any additional requirements, to Franchisor's satisfaction. Franchisee and its contractors will cooperate fully with any inspections Franchisor conducts under a Material Change Review.
E. Transition Accounting Period Franchise Fees. For purposes of calculating the Franchise Fees due with respect to Gross Room Sales for the Transition Accounting Period, Franchisor may, in its sole discretion, apply the percentage rate that was in effect for the Hotel immediately before the Effective Date (the "Previous Rate") in lieu of the Franchise Fees required by Item 11 of Exhibit A, but only if the Previous Rate is less than the percentage rate stated in Item 11 of Exhibit A."
C. The following are added to Section 26.2:
- "F. NO ENDORSEMENT. FRANCHISEE ACKNOWLEDGES THAT FRANCHISOR DID NOT APPROVE, RECOMMEND, ENDORSE OR PARTICIPATE IN ANY DECISIONS ABOUT THE TERMS OF ANY TRANSACTION UNDER WHICH FRANCHISEE ACQUIRED CONTROL OF THE HOTEL, INCLUDING THE PURCHASE PRICE, AND DID NOT COMMENT ON ANY FINANCIAL PROJECTIONS SUBMITTED TO FRANCHISEE.
G. EXISTING AGREEMENTS.
FRANCHISEE AGREES TO BE BOUND BY ALL AGREEMENTS BETWEEN THE PRIOR FRANCHISEE OF THE HOTEL AND FRANCHISOR OR ITS AFFILIATES, SUCH AS LICENSE, SERVICE OR REVENUE MANAGEMENT AGREEMENTS AND ANY OTHER AGREEMENTS RELATING TO THE HOTEL."
Source: Item 23 — RECEIPTS (FDD pages 134–251)
What This Means (2025 FDD)
According to the 2025 Delta Hotels By Marriott Franchise Disclosure Document, Exhibit C modifies the Franchise Agreement in several key areas, depending on whether it is a change of ownership or a conversion. For a change of ownership, Exhibit C modifies the agreement to ensure the hotel continues to operate as a System Hotel, particularly concerning renovations outlined in Section 4.4. References to the 'Franchise Agreement' are changed to 'Relicensing Franchise Agreement' on the cover, table of contents, first page, and signature page. Additionally, specific items like 'Chain Acquisition,' 'Construction Start Deadline,' 'Opening Deadline,' and 'Restricted Territory' are removed from Exhibit B.
For hotels undergoing a conversion to a Delta Hotels By Marriott, Exhibit C stipulates that the hotel must be renovated according to its terms and Section 4.4 of the agreement. A crucial element of this is the Property Improvement Plan (PIP), detailed in Attachment Three to Exhibit C, which outlines the specific renovations required for the hotel to meet System standards. These renovations must be completed by the Opening Date, as defined in Exhibit C, unless otherwise specified in the PIP.
Exhibit C also addresses potential material changes to the hotel. If any such changes occur after the date stated in Item 19 of Exhibit A, Delta Hotels By Marriott reserves the right to re-inspect the hotel and modify the PIP accordingly. The franchisee is then obligated to complete the modified PIP to the satisfaction of Delta Hotels By Marriott, ensuring that the hotel adheres to the current System specifications. This includes cooperating fully with any inspections conducted by Delta Hotels By Marriott during the Material Change Review.
Furthermore, in the context of a change of ownership, the agreement includes clauses regarding transition accounting period franchise fees, where Delta Hotels By Marriott may apply the previous rate if it is lower than the rate specified in Item 11 of Exhibit A. It also includes acknowledgements that Delta Hotels By Marriott did not endorse or participate in decisions about the terms of the franchisee's acquisition of the hotel. The franchisee also agrees to be bound by existing agreements between the prior franchisee and Delta Hotels By Marriott or its affiliates.