When must a lender notify the Embassy Suites franchisor after an Acquisition has occurred?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- Notice to Franchisor. Lender agrees to notify Franchisor (a) contemporaneously with the commencement of any action that may result in an Acquisition; (b) contemporaneously with the filing of a petition for appointment of a receiver or any other action initiated by Lender that materially impacts possession of the Hotel; (c) promptly after an Acquisition of the date the Acquisition occurred, or (d) promptly after Lender no longer has a security interest in the equity ownership of Franchisee or the Loan is paid in full, but Lender's failure to give notice under this Subparagraph 3(d) will not affect the automatic termination of this letter agreement under Paragraph 11 [NO ESTOPPEL] 12 [ESTOPPEL]. Lender further agrees to promptly provide to Franchisor a copy of any order appointing a receiver or any other judicial or administrative order from an action initiated by Lender that materially impacts possession of the Hotel. All notices to Franchisor should be sent to the following address or such other address periodically designated by Franchisor in writing:
Hilton Worldwide Holdings Inc. Attention: General Counsel 7930 Jones Branch Drive, Suite 1100 McLean, VA 22102
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a lender must notify the franchisor promptly after an Acquisition has occurred. This requirement is part of the Mezzanine Lender Comfort Letter, which outlines the relationship and obligations between the lender and Embassy Suites in the event the lender acquires the hotel.
Specifically, the lender's notification should include the date the Acquisition occurred. This ensures that Embassy Suites is informed of the change in ownership or control of the hotel in a timely manner. The lender also has to notify Embassy Suites contemporaneously with the commencement of any action that may result in an Acquisition and contemporaneously with the filing of a petition for appointment of a receiver or any other action initiated by Lender that materially impacts possession of the Hotel.
This notification is crucial for Embassy Suites to maintain brand standards and ensure a smooth transition. It allows Embassy Suites to initiate its processes for assumption of the franchise agreement, assess the new ownership, and ensure compliance with the franchise terms. Failure to provide timely notice could potentially impact the lender's standing and the hotel's franchise agreement.