What actions are prohibited for an Assignee of the Loan in relation to the Franchisee for Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) any subsequent holder or holders of the Loan ("Assignee") if (1) the Loan is not in default when notice is given; (2) Lender gives notice to Franchisor, identifying Assignee and the new address for notice, within thirty (30) days of the transfer; and (3) the Assignee (i) is a national bank, statechartered bank, commercial bank, investment bank, pension fund, finance company, insurance company, or other financial institution engaged in the business of making loans or any fund managed by any of the foregoing, (ii) is not a Competitor of Franchisor, and (iii) does not own directly or indirectly, any equity interest in Franchisee or its constituent owners; provided, however, that Franchisor may, in its discretion, reject a notice if the Loan is in default when notice is given, or if the notice is not sent by Lender, or if notice is not sent in a timely manner in accordance with this Subparagraph.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, an Assignee of a loan is subject to certain restrictions to be approved by Embassy Suites. Specifically, for a subsequent holder or holders of the Loan to be approved as an Assignee, the loan cannot be in default when notice is given to Embassy Suites. The lender must provide notice to Embassy Suites within thirty days of the transfer, identifying the Assignee and providing a new address for notice.
Furthermore, the Assignee must meet specific criteria. The Assignee must be a national bank, state-chartered bank, commercial bank, investment bank, pension fund, finance company, insurance company, or other financial institution engaged in the business of making loans or any fund managed by any of the foregoing. Critically, the Assignee cannot be a Competitor of Embassy Suites. Additionally, the Assignee cannot own, directly or indirectly, any equity interest in the Franchisee or its constituent owners.
Embassy Suites retains the discretion to reject a notice if the loan is in default when the notice is given, if the notice is not sent by the Lender, or if the notice is not sent in a timely manner, meaning within the specified 30-day period. These conditions ensure that the Assignee meets certain financial and competitive criteria and that Embassy Suites is promptly informed of any changes in the loan's ownership.