What is the deadline for the lender to cure all defaults which it could not cure before the Acquisition for the Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender will be deemed to have assumed the rights and obligations of Franchisee under the Franchise Agreement as of the date of the Acquisition, and will be obligated to perform all of the obligations of Franchisee under the Franchise Agreement existing at or accruing after the date of the Acquisition, including the payment of fees owed to Franchisor ("Assumption"). In connection with the Assumption, Lender must diligently cure all defaults which it could not cure before the Acquisition, 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.
- (b) Amendment. Lender must, within ten (10) business days after Franchisor's request, provide Franchisor all information necessary for Franchisor to determine that Lender is not a Sanctioned Person (as defined below), and deliver any other documents regarding Lender's ownership structure that Franchisor reasonably requests. Franchisor will promptly prepare an amendment to the Franchise Agreement ("Amendment") to document the Assumption, and deliver the Amendment to Lender. Lender must execute and return the Amendment to Franchisor within ten (10) business days after receipt from Franchisor. Lender's failure to timely execute and deliver to Franchisor the Amendment shall be a default under the Franchise Agreement entitling Franchisor to terminate the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, if a lender acquires the hotel, they are obligated to cure any outstanding defaults. The deadline for the lender to cure these defaults, which they couldn't resolve before acquiring the hotel, is determined by Embassy Suites. This timeframe is based on the specific nature of the default and/or the condition of the hotel at the time of the lender's acquisition. This excludes personal and non-curable defaults, which are defaults that occurred before the acquisition, are non-curable, are purely personal to the franchisee, and are unrelated to the hotel's operation.
Specifically, the lender is deemed to have assumed the rights and obligations of the franchisee under the franchise agreement as of the date of the acquisition. This includes performing all obligations of the franchisee existing at or accruing after the acquisition date, such as paying fees owed to Embassy Suites. To document this assumption, the lender must provide all necessary information to Embassy Suites to confirm they are not a Sanctioned Person and deliver any other requested documents regarding the lender's ownership structure within ten business days of Embassy Suites's request.
Embassy Suites will then prepare an amendment to the franchise agreement to document the assumption and deliver it to the lender. The lender must execute and return this amendment within ten business days of receipt. Failure to do so constitutes a default under the franchise agreement, potentially leading to termination. This process ensures that any outstanding issues are addressed promptly following the acquisition, maintaining the standards and obligations of the franchise agreement.