During the Additional Period for an Embassy Suites franchise, what obligations of the franchisee must the lender comply with?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
If the default is for failure to comply with physical standards or other non-monetary default which could only be cured by Lender acquiring possession and/or ownership of the Hotel (each, an "Acquisition"), Lender may have an additional period of one hundred eighty (180) calendar days, commencing at the expiration of Lender's Cure Period, for Lender to complete its Acquisition, through foreclosure or other appropriate proceedings ("Additional Period"); provided that Lender must: (i) notify Franchisor no later than the date it commences proceedings (or promptly after action is stayed or enjoined) that Lender wants the Additional Period; (ii) commence proceedings and diligently prosecute such proceedings to completion; and (iii) comply with the obligations of Franchisee under the Franchise Agreement not being performed by Franchisee during the Additional Period including payment of all monetary obligations but excluding those obligations which can only be performed by Franchisee or which Lender cannot perform without possession and/or ownership of the Hotel.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, during the Additional Period, the lender must adhere to specific obligations of the franchisee under the Franchise Agreement. The lender is required to comply with the obligations of the franchisee that the franchisee is not performing. This includes the payment of all monetary obligations. However, the lender is not responsible for obligations that can only be performed by the franchisee or those the lender cannot perform without possessing or owning the hotel.
The Additional Period is available to the lender to complete the Acquisition, through foreclosure or other appropriate proceedings. To qualify for the Additional Period, the lender must notify Embassy Suites that it wants the Additional Period no later than when it commences proceedings. The lender must also commence proceedings and diligently prosecute such proceedings to completion.
This arrangement provides a framework for lenders to protect their investment in an Embassy Suites franchise while ensuring that key obligations under the Franchise Agreement are maintained, to the extent possible, during a period of transition or potential ownership change. The franchisor retains some control by requiring notification and diligent prosecution of proceedings, and by setting the conditions for what obligations the lender must fulfill.