What conditions in the transfer provisions of the Embassy Suites Franchise Agreement apply to the Assumption by the Lender?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Any conditions in the transfer provisions of the Franchise Agreement that Franchisor deems relevant shall apply with respect to the Assumption, including but not limited to the obligation for Lender to submit its ownership structure, organizational documents and evidence of insurance.
Lender must, within ten (10) business days after receipt of a request from Franchisor, provide to Franchisor all information necessary for Franchisor to determine that Lender is not a Sanctioned Person (as defined below), as well as the other information reasonably requested.
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
If the Franchise Agreement does not reference a permitted transfer fee, then the processing fee will be Five Thousand Five Hundred Dollars ($5,500).
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, if a lender acquires possession or ownership of a hotel as a result of an acquisition, the lender is deemed to have assumed the Franchise Agreement. In this case, any conditions in the transfer provisions that Embassy Suites deems relevant will apply to the assumption. These conditions include the lender's obligation to submit its ownership structure, organizational documents, and evidence of insurance.
The lender must provide all necessary information within ten business days of Embassy Suites' request to determine if the lender is a Sanctioned Person. If Embassy Suites confirms that the lender is not a Sanctioned Person, Embassy Suites will prepare its current form assumption agreement to document the assumption and deliver it to the lender. The lender must then execute and return the assumption agreement within ten business days of receipt. Failure to do so may be considered a default under the Franchise Agreement, potentially leading to termination.
Furthermore, any renovation requirements imposed by Embassy Suites in connection with the assumption will not exceed what could have been imposed had the original franchisee remained in place. In place of a transfer or application fee for the assumption, the lender must pay Embassy Suites a processing fee. If the Franchise Agreement does not reference a permitted transfer fee, then the processing fee will be Five Thousand Five Hundred Dollars ($5,500).