What is the definition of 'Waiver Notice' in the context of the Embassy Suites franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender may give written notice (a "Waiver Notice") to Franchisor of Lender's election to waive Lender's right to assume the Franchise Agreement at any time (i) during Lender's Cure Period, or the Additional Period, as the Additional Period may be extended in accordance with Subparagraph 1(b) of this letter agreement, or (ii) within twenty (20) calendar days after the completion of the Acquisition.
If given, the Waiver Notice will be effective twenty (20) calendar days after Franchisor's receipt of the Waiver Notice, and Franchisor may rely on the Waiver Notice to exercise its remedies against Franchisee under the Franchise Agreement, including termination of the Franchise Agreement.
Lender shall not be liable for any termination fees or liquidated damages arising from the early termination of the Franchise Agreement; provided, however, if Lender or its designee is or comes into possession of the Hotel before the Waiver Notice is effective, then Lender shall be responsible for posttermination de-identification obligations at the Hotel, and for payment of any fees owed to Franchisor pursuant to the Franchise Agreement that accrued while Lender was in possession of the Hotel before the Waiver Notice is effective, but excluding termination fees or liquidated damages.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, a 'Waiver Notice' is a written notification that the lender provides to Embassy Suites, indicating the lender's decision to waive their right to assume the franchise agreement. This notice can be given either during the lender's cure period or any extension of it, or within 20 calendar days after the completion of the acquisition of the hotel.
The 'Waiver Notice' becomes effective 20 calendar days after Embassy Suites receives it. Upon effectiveness, Embassy Suites can then exercise its rights and remedies against the franchisee, which may include terminating the franchise agreement. This waiver allows the lender to avoid assuming the full responsibilities of the franchise agreement, while also allowing Embassy Suites to pursue other options for the hotel's franchise.
However, if the lender or its designee takes possession of the hotel before the 'Waiver Notice' becomes effective, the lender is responsible for the costs of de-identifying the hotel post-termination and for any fees owed to Embassy Suites that accrued during the period the lender was in possession, excluding termination fees or liquidated damages. This provision ensures that Embassy Suites is not left with unpaid fees or the cost of removing branding if the lender operates the hotel temporarily before the waiver takes effect.
This clause is particularly important for prospective Embassy Suites franchisees to understand, as it outlines the rights and responsibilities of lenders in the event of a franchisee default and potential foreclosure. It clarifies the circumstances under which a lender might waive the assumption of the franchise agreement and the implications for both the lender and Embassy Suites.