In connection with the Assumption, what must the Lender diligently cure for an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
In connection with the Assumption, Lender must diligently cure all defaults which it could not cure before the Acquisition under the terms of Subparagraph 1(b), within the time period determined by Franchisor based on the nature of the default and/or the condition of the Hotel at the time of Lender's Acquisition except for personal and non-curable defaults. "Personal and non-curable defaults" means that the default (i) occurred before the date of Lender's Acquisition; (ii) is a non-curable default; (iii) is purely personal to Franchisee (e.g., failure to provide adequate notice or past failure to maintain Franchisee's company status); and (iv) is unrelated to the operation of the Hotel.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, in the event of an Assumption, the Lender must diligently cure all defaults that it could not cure before the Acquisition. The timeframe for curing these defaults will be determined by Embassy Suites, based on the nature of the default and/or the condition of the hotel at the time of the Lender's Acquisition.
However, there are exceptions to this requirement. The Lender is not required to cure "personal and non-curable defaults." These are defined as defaults that (i) occurred before the date of the Lender's Acquisition; (ii) are non-curable; (iii) are purely personal to the Franchisee (e.g., failure to provide adequate notice or past failure to maintain Franchisee's company status); and (iv) are unrelated to the operation of the Hotel.
This means that a prospective Embassy Suites franchisee needs to understand the financial health and operational standing of the current franchisee. If a lender takes over the franchise, the new franchisee will be responsible for curing any outstanding issues, so it is important to be aware of these potential liabilities. However, the lender will not be responsible for issues that are deemed personal and non-curable, as defined in the FDD.