What is the duration of the Lender's Cure Period mentioned in the context of the Embassy Suites franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender shall have the right, but not the obligation, to cure the default within fifteen (15) calendar days beyond the expiration of any cure period given to Franchisee ("Lender's Cure Period"). If the default is for failure to comply with physical standards or other non-monetary default which could only be cured by Lender acquiring possession of the Hotel and/or ownership of Franchisee (each, an "Acquisition"), Lender may have an additional period of one hundred eighty (180) calendar days, commencing at the expiration of Lender's Cure Period, to complete its Acquisition, through UCC sale, foreclosure or other appropriate proceedings ("Additional Period"); provided, that Lender must: (i) notify Franchisor no later than the date it commences proceedings (or promptly after action is stayed or enjoined) that Lender wants the Additional Period; (ii) commence proceedings and diligently prosecute such proceedings to completion within the Additional Period; and (iii) comply with the obligations of Franchisee under the Franchise Agreement not being performed by Franchisee during the Additional Period including payment of all monetary obligations but excluding those obligations which can only be performed by Franchisee or which Lender cannot perform without possession of the Hotel and/or ownership of Franchisee. On request by Lender, the Additional Period may be extended by Franchisor in its determination, which determination shall take into consideration the period of time required to complete an Acquisition in the applicable jurisdiction, and any period of time in which Lender's action has been stayed or enjoined. If Franchisor has not issued a default notice to
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a lender who has provided financing to a franchisee has certain rights to cure defaults by the franchisee. Specifically, the lender has the right, but not the obligation, to cure the default within fifteen calendar days beyond the expiration of any cure period given to the franchisee; this is referred to as the Lender's Cure Period. This means that if Embassy Suites sends a default notice to a franchisee and provides a period for the franchisee to correct the issue, the lender gets an additional 15 days after that period to cure the default.
If the default involves failure to comply with physical standards or other non-monetary issues that can only be resolved by the lender taking possession or ownership of the hotel (an Acquisition), the lender may have an additional 180 calendar days, commencing at the expiration of the Lender's Cure Period, to complete the Acquisition through a UCC sale, foreclosure, or other appropriate proceedings. To be eligible for this extended period, the lender must notify Embassy Suites that they want the Additional Period no later than when they commence proceedings, diligently pursue the proceedings to completion, and comply with the franchisee's obligations under the Franchise Agreement that the franchisee is not performing, including payment of all monetary obligations.
Embassy Suites may extend the Additional Period at the lender's request, considering the time needed to complete an Acquisition in the relevant jurisdiction and any periods during which the lender's action has been stayed or enjoined. If Embassy Suites has not issued a default notice to the franchisee, the lender's notice to Embassy Suites of the franchisee's default under the loan will be considered the start of the Lender's Cure Period and Additional Period. This arrangement is designed to protect the lender's investment in the franchise by providing them with opportunities to rectify defaults and potentially take over the franchise to ensure its continued operation and compliance with the franchise agreement.