What is the Embassy Suites franchisor entitled to if the lender defaults on the Amendment?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
n fee for the Assumption, Lender agrees to pay Franchisor
| Lender | | | |--------|-----------------------------|--| | Re: | Hotel Name – Facility No | | | Page 4 | | | a processing fee of Five Thousand Five Hundred Dollars ($5,500). 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
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, if a lender fails to execute and deliver the Amendment in a timely manner, it constitutes a default under the Franchise Agreement. In such a case, Embassy Suites is entitled to terminate the Franchise Agreement.
This provision is designed to ensure that lenders comply with the necessary steps to document changes in control and ownership, particularly in situations involving equity acquisitions. The Amendment serves to update the Franchise Agreement with the new ownership structure and confirm that the lender is not a Sanctioned Person. The franchisor requires the lender to execute and return the amendment within ten business days of receipt.
The franchisor's right to terminate the agreement underscores the importance of adhering to the franchisor's requirements during a transfer or acquisition. This protects Embassy Suites by ensuring that any new controlling party meets their standards and obligations. Franchisees and lenders need to be aware of these timelines and requirements to avoid potential termination of the franchise agreement.
In addition to the right to terminate the Franchise Agreement, the lender is responsible for paying a processing fee of $5,500 to Embassy Suites in lieu of any transfer or application fee. This fee is associated with documenting the change of control of the franchisee.