What conditions must be met for a subsequent holder of the loan ('Assignee') to be recognized by 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.
On receipt and acceptance of the notice, Franchisor will promptly prepare its then-current form of Assignment and Assumption Agreement ("Assignment") and Lender and Assignee must promptly execute and return the Assignment.
Franchisor may charge a nominal fee for processing the Assignment.
If there is more than one Assignee, the Assignees must (i) designate a single representative to receive notices, negotiate on behalf of and bind each Assignee in connection with this letter agreement and any assignment thereof, and (ii) acknowledge that Franchisor shall be entitled to rely on such designation and deal solely with such representative without the necessity of notifying, negotiating with, or obtaining the consent of, each Assignee.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, for a subsequent loan holder (Assignee) to be recognized, several conditions must be met. First, the loan cannot be in default when the notice is given to Embassy Suites. Second, the lender must provide notice to Embassy Suites within 30 days of the transfer, identifying the Assignee and providing their new address for receiving notices.
Additionally, the Assignee must meet specific criteria. They must be a national bank, state-chartered bank, commercial bank, investment bank, pension fund, finance company, insurance company, or another financial institution engaged in the business of making loans, or a fund managed by any of these entities. The Assignee cannot be a competitor of Embassy Suites, and they must not directly or indirectly own any equity interest in the franchisee or its constituent owners. However, Embassy Suites retains the discretion to reject a notice if the loan is in default when the notice is given, if the lender does not send the notice, or if the notice is not sent in a timely manner.
Upon receiving and accepting the notice, Embassy Suites will prepare its current form of Assignment and Assumption Agreement, which both the lender and Assignee must promptly execute and return. Embassy Suites may charge a nominal fee for processing this assignment. If there are multiple Assignees, they must designate a single representative to receive notices and negotiate on their behalf, and Embassy Suites is entitled to rely solely on this representative.
This process ensures that Embassy Suites maintains control over who holds the loan and can protect its interests by preventing competitors or entities with a stake in the franchisee from becoming involved. It also streamlines communication and administrative processes when the loan is transferred.