Under what conditions does the agreement terminate for Delta Hotels By Marriott franchisees?
Delta_Hotels_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
7. Term and Termination.
- a.
Term and Termination.
The initial term of this Agreement shall begin on the Commencement Date and shall expire either (1) December 31 of that same year, if the Commencement Date is between January 1st and June 30, or (2) December 31 of the next year, if the Commencement Date is between July 1 and December 31.
For purposes of clarity, if the Commencement Date is November 5, 2019, the initial term will expire on December 31, 2020.
This Agreement shall automatically renew for successive terms of one calendar year each unless either party provides written notice of non-renewal at least ninety (90) days in advance of the expiration of the then-current term.
- b.
In the event that Franchisee is in default under this Agreement, Marriott may terminate this Agreement by giving thirty (30) days' written notice to Franchisee.
- c.
Subject to Section 7.d, Franchisee may terminate this Agreement by giving ninety (90) days' written notice to Marriott.
- d.
This Agreement will immediately terminate upon termination of the Franchise Agreement; except in the event that Marriott consents to or approves the transaction (including a sale of the Hotel or other transfer requiring the consent of Marriott) pursuant to which the Franchise Agreement is terminated, in which case this Agreement may be assigned as set forth in any such consent or approval.
- 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.
Source: Item 6 — Obligations of Franchisee.** Franchisee agrees to the following: (FDD pages 363–513)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, the Delta Hotels By Marriott franchise agreement outlines several conditions under which termination can occur. The initial term of the agreement depends on the commencement date, expiring either on December 31 of the same year if the commencement date falls between January 1st and June 30th, or on December 31st of the following year if the commencement date is between July 1st and December 31st. The agreement automatically renews for successive one-year terms unless either party provides written notice of non-renewal at least 90 days before the current term expires.
Delta Hotels By Marriott may terminate the agreement if the franchisee defaults, providing 30 days' written notice. Conversely, the franchisee can terminate the agreement by giving Delta Hotels By Marriott 90 days' written notice, subject to specific conditions. The agreement will also terminate immediately upon the termination of the Franchise Agreement, unless Marriott consents to or approves a transaction, such as a sale of the hotel, that leads to the Franchise Agreement's termination, in which case the agreement may be assigned according to the terms of the consent or approval.
Furthermore, the FDD states that Marriott may incur damages upon termination of the agreement due to franchisee default or franchisee termination. In such cases, Marriott is entitled to recover from the franchisee both prior costs and future costs associated with the hotel's participation in programs, with these costs to be paid by the franchisee no later than the termination date. These costs are considered a reasonable estimate of compensation for damages suffered by Marriott due to the termination, and the franchisee's obligation to pay these costs survives the termination of the agreement.