What is an 'Assumption Agreement' in the context of an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Lender's failure to timely execute and deliver the Assumption Agreement may be deemed a default under the Franchise Agreement entitling Franchisor to terminate the Franchise Agreement.
Any renovation requirements imposed by Franchisor in connection with the Assumption will not exceed those which Franchisor could have imposed had Franchisee remained as the Franchisee under the Franchise Agreement.
In lieu of any transfer or application fee for the Assumption, Lender agrees to pay Franchisor
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, an Assumption Agreement is a document used when a lender acquires possession or ownership of an Embassy Suites hotel due to an acquisition. In this scenario, the lender is considered to have assumed the existing franchise agreement. To formalize this assumption, Embassy Suites will prepare its standard Assumption Agreement and provide it to the lender.
The lender is then required to execute and return the Assumption Agreement to Embassy Suites within ten business days of receiving it. Failure to do so may be considered a default under the franchise agreement, potentially leading to termination of the agreement. This agreement ensures that the lender is bound by the terms of the original franchise agreement and any relevant transfer conditions.
Before the Assumption Agreement is issued, the lender must provide Embassy Suites with all necessary information to verify that the lender is not a Sanctioned Person. The Assumption Agreement documents the lender's commitment to fulfill the franchisee's obligations, including paying fees owed to Embassy Suites. Any renovation requirements imposed on the lender will not exceed what Embassy Suites could have required of the original franchisee. In place of a transfer or application fee, the lender may be required to pay a processing fee, which, as described in another section, could be $5,500 if the franchise agreement does not specify a transfer fee.