What information must a lender provide to the Franchisor after acquiring an Embassy Suites hotel?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
If Lender acquires possession and/or ownership of the Hotel as the result of an Acquisition, Lender will be deemed to have assumed the Franchise Agreement as of the date of the Acquisition.
Lender will be obligated to perform all of the obligations of Franchisee under the Franchise Agreement existing at or accruing after the Acquisition date, including the payment of fees owed to Franchisor ("Assumption").
Any conditions in the transfer provisions of the Franchise Agreement that Franchisor deems relevant shall apply with respect to the Assumption, including but not limited to the obligation for Lender to submit its ownership structure, organizational documents and evidence of insurance.
Lender must, within ten (10) business days after receipt of a request from Franchisor, provide to Franchisor all information necessary for Franchisor to determine that Lender is not a Sanctioned Person (as defined below), as well as the other information reasonably requested.
If Franchisor confirms that Lender is not a Sanctioned Person, Franchisor will promptly prepare Franchisor's then-current form assumption agreement ("Assumption Agreement") to document the Assumption, and deliver the Assumption Agreement to Lender.
Lender must execute and return the Assumption Agreement to Franchisor within ten (10) business days after receipt from Franchisor.
Lender's failure to timely execute and deliver the Assumption Agreement may be deemed 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 possession and/or ownership of an Embassy Suites hotel, the lender is considered to have assumed the Franchise Agreement. As part of this assumption, the lender must fulfill several obligations to the franchisor. Within ten business days of receiving a request from Embassy Suites, the lender must provide all information necessary for Embassy Suites to determine that the lender is not a Sanctioned Person. The lender must also provide other reasonably requested information. If Embassy Suites confirms that the lender is not a Sanctioned Person, Embassy Suites will prepare its current form assumption agreement. The lender must then execute and return this agreement within ten business days of receipt. Failure to do so may be considered a default under the Franchise Agreement, potentially leading to termination of the agreement.
In addition to determining if the lender is a Sanctioned Person, the lender must also submit its ownership structure, organizational documents, and evidence of insurance if Embassy Suites deems it relevant based on the transfer provisions of the Franchise Agreement. The lender is also responsible for diligently curing all defaults that it could not cure before the acquisition, within a timeframe determined by Embassy Suites based on the nature of the default and the condition of the hotel at the time of the lender's acquisition.
Furthermore, if the lender acquires ownership of the franchisee through an equity acquisition, the lender must enter into an amendment to the Franchise Agreement to document the change of control. This amendment will include a new ownership structure for the franchisee. Subject to confirmation that the lender is not a Sanctioned Person, Embassy Suites will prepare the amendment promptly after receiving any requested information. The lender must execute and return the amendment within ten business days of receiving it from Embassy Suites, or risk defaulting on the Franchise Agreement.