What is the initial cure period granted to the lender following an Embassy Suites franchisee default?
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 and/or ownership of the Hotel (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, for Lender to complete its Acquisition, through 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; 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 and/or ownership of the Hotel.
On request by Lender, the Additional Period may be further 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 Franchisee or Lender has cured Franchisee's default during Lender's Cure Period and Lender commences a foreclosure or other proceeding intended to result in an Acquisition, Lender may exercise the rights under this letter agreement under the terms and timelines outlined in this Subparagraph.
If Franchisor has not issued a default notice, Lender's notice to Franchisor of Franchisee's default under the Loan will be deemed to initiate the timeline outlined under the Lender's Cure Period and Additional Period.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a lender has the right to cure a franchisee's default within fifteen calendar days beyond the expiration of the cure period given to the franchisee. This period is referred to as the "Lender's Cure Period." This means that if an Embassy Suites franchisee defaults on their obligations, the lender has a window of opportunity to rectify the situation and prevent further action from the franchisor.
If the default involves failure to comply with physical standards or other non-monetary issues that require the lender to take possession or ownership of the hotel (referred to as an "Acquisition"), the lender may be granted an additional 180 calendar days, starting after the Lender's Cure Period, to complete the Acquisition through foreclosure or other proceedings. To qualify for this extension, the lender must notify Embassy Suites that they want the additional time, commence proceedings, diligently pursue those proceedings, and comply with the franchisee's obligations under the Franchise Agreement, including monetary obligations, except those that only the franchisee can perform or that the lender cannot perform without possession or ownership of the hotel.
Embassy Suites may further extend this Additional Period at the lender's request, considering the time needed to complete the 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, or if the lender cures the franchisee's default during the Lender's Cure Period and starts a foreclosure or other proceeding to acquire the hotel, the lender can exercise their rights under the terms and timelines specified. If Embassy Suites has not issued a default notice, the lender's notice to Embassy Suites of the franchisee's default under the loan will initiate the Lender's Cure Period and Additional Period.