What are the conditions that the lender must meet to be granted the 'Additional Period' for an Embassy Suites franchise?
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.
On request by Lender, the Additional Period may be further extended by Franchisor in its determination, which determination shall take into consideration the period of time required to complete an Acquisition in the applicable jurisdiction, and any period of time in which Lender's action has been stayed or enjoined.
If Franchisor has not issued a default notice to Franchisee or Lender has cured Franchisee's default during Lender's Cure Period and Lender commences a foreclosure or other proceeding intended to result in an Acquisition, Lender may exercise the rights under this letter agreement under the terms and timelines outlined in this Subparagraph.
If Franchisor has not issued a default notice, Lender's notice to Franchisor of Franchisee's default under the Loan will be deemed to initiate the timeline outlined under the Lender's Cure Period and Additional Period.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, a lender may be granted an 'Additional Period' of 180 calendar days beyond the Lender's Cure Period to complete the acquisition of the hotel through foreclosure or other proceedings. This is applicable if the franchisee's default involves non-monetary issues like failure to comply with physical standards, which can only be resolved by the lender taking possession or ownership of the hotel.
To qualify for this Additional Period, the lender must meet specific conditions. First, the lender must notify Embassy Suites that they want the Additional Period no later than when they start proceedings, or promptly after any action is stayed or enjoined. Second, the lender must commence proceedings and diligently pursue them to completion. Third, the lender must fulfill the franchisee's obligations under the Franchise Agreement that the franchisee is not performing during the Additional Period. This includes paying all monetary obligations, except for those that only the franchisee can perform or those the lender cannot perform without possessing or owning the hotel.
Embassy Suites may further extend the Additional Period upon the lender's request. This determination considers the time needed to complete the acquisition in the relevant jurisdiction and any periods when the lender's actions have been stayed or legally blocked. If Embassy Suites hasn't issued a default notice to the franchisee, or if the lender has resolved the franchisee's default during the Lender's Cure Period and starts proceedings to acquire the hotel, the lender can still exercise the rights under this agreement, following the outlined terms and timelines. Also, if Embassy Suites has not issued a default notice, the lender's notice to Embassy Suites of the franchisee's default under the loan will initiate the Lender's Cure Period and Additional Period.