What action must the Lender diligently undertake in connection with the Assumption of an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
to Franchisor under Subparagraph 2(a), the Franchise Agreement will continue in full force and effect. ] If Lender acquires possession and/or ownership of the Hotel as the result of an Acquisition, Lender will be deemed to have assumed the Franchise Agreement as of the date of the Acquisition. Lender will be obligated to perform all of the obligations of Franchisee under the Franchise Agreement existing at or accruing after the Acquisition date, including the payment of fees owed to Franchisor ("Assumption"). Any conditions in the transfer provisions of the Franchise Agreement that Franchisor deems relevant shall apply with respect to the Assumption, including but not limited to the obligation for Lender to submit its ownership structure, organizational documents and evidence of insurance. Lender must, within ten (10) business days after receipt of a request from Franchisor, provide to Franchisor all information necessary for Franchisor to determine that Lender is not a Sanctioned Person (as defined below), as well as the other information reasonably requested. If Franchisor confirms that Lender is not a Sanctioned Person, Franchisor will promptly prepare Franchisor's then-current form assumption agreement ("Assumption Agreement") to document the Assumption, and deliver the Assumption Agreement to Lender. Lender must execute and return the Assumption Agreement to Franchisor within ten (10) business days after receipt from Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, in connection with the Assumption of a franchise, the Lender must diligently cure all defaults which it could not cure before the Acquisition. The time period for curing these defaults will be determined by Embassy Suites, based on the nature of the default and/or the condition of the Hotel at the time of the Lender's Acquisition. However, the lender does not have to cure "personal and non-curable defaults".
Additionally, the Lender is obligated to perform all of the obligations of the Franchisee under the Franchise Agreement existing at or accruing after the date of the Acquisition, including the payment of fees owed to Embassy Suites. The lender must also provide Embassy Suites with all information necessary to determine that the Lender is not a Sanctioned Person within ten business days after a request from Embassy Suites, and deliver any other reasonably requested documents regarding the Lender's ownership structure.
Furthermore, the Lender must execute and return the Amendment to Embassy Suites within ten business days after receipt from Embassy Suites. Failure to do so will be a default under the Franchise Agreement, potentially leading to termination of the agreement. In lieu of any transfer or application fee for the Assumption, the Lender must pay Embassy Suites a processing fee of $5,500.
These requirements ensure that Embassy Suites maintains control over its brand standards and financial interests even when a lender assumes control of a franchise location. The lender's responsibilities are clearly defined to protect the franchisor's interests and maintain the integrity of the Embassy Suites system.