When must a lender notify the Embassy Suites franchisor of the filing of a petition for appointment of a receiver?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- Notice to Franchisor. Lender agrees to notify Franchisor (a) contemporaneously with 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 Hotel 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 13 [NO ESTOPPEL] 14 [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.
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 Embassy Suites contemporaneously with the filing of a petition for appointment of a receiver. This requirement is part of the Mezzanine Lender Comfort Letter, which outlines the terms and conditions under which a lender can take certain actions related to a franchised Embassy Suites hotel. This notification is required when the lender initiates any action that materially impacts possession of the hotel.
In practical terms, this means that if a lender takes legal steps to have a receiver appointed to manage the Embassy Suites hotel due to financial distress or other issues, they must inform Embassy Suites at the same time the petition is filed. The lender must also promptly provide Embassy Suites with a copy of any order appointing a receiver, or any other judicial or administrative order from an action initiated by the lender that materially impacts possession of the Hotel.
The purpose of this notification is to keep Embassy Suites informed about the status of the hotel and any potential changes in its operation or ownership. This allows Embassy Suites to protect its brand and ensure that the hotel continues to meet its standards. The FDD specifies that all notices to Embassy Suites should be sent to the address listed in the document, unless otherwise designated by Embassy Suites in writing. For securitization notices, the lender may use the specified email address with read receipt confirmation.
Failure to provide timely notice could have implications under the Franchise Agreement. Specifically, the lender also agrees to notify Embassy Suites contemporaneously with the commencement of any action that may result in an Acquisition and promptly after an Acquisition of the date the Acquisition occurred. While failure to notify under subparagraph 3(d) regarding the lender no longer having a security interest in the Hotel or the Loan being paid in full will not affect the automatic termination of the letter agreement, it is important to adhere to all notification requirements to maintain a transparent relationship with Embassy Suites.