What is the purpose of the Amendment to the Embassy Suites Franchise Agreement prepared by the franchisor?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
If Lender acquires ownership of the Franchisee by means of an Equity Acquisition, Lender will be deemed to have assumed the rights and obligations of the Franchisee under the Franchise Agreement as of the date of the Equity Acquisition, and Lender must diligently cure all defaults which Lender could not cure before the Equity Acquisition under the terms of Subparagraph 1(b), within the time period determined by Franchisor based on the nature of the default and/or the condition of the Hotel at the time of Lender's Equity Acquisition.
Lender must enter into an amendment to the Franchise Agreement to document the change of control of Franchisee, which will, among other things, contain a new ownership structure for Franchisee ("Amendment").
Subject to confirmation that Lender is not a Sanctioned Person, Franchisor will prepare the Amendment promptly after receipt of any information requested under this Subparagraph 2(c).
Franchisor will deliver the Amendment to Lender, and Lender will execute and return the Amendment to Franchisor within ten (10) business days after Franchisor delivers it.
Lender's failure to timely execute and deliver to Franchisor the Amendment shall be 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 the 2025 Embassy Suites Franchise Disclosure Document, the franchisor prepares an amendment to the franchise agreement to document the assumption of rights and obligations by a lender in certain situations. Specifically, if a 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.
The Embassy Suites franchisor will prepare the amendment promptly after receiving any requested information, contingent on confirming that the lender is not a Sanctioned Person. The lender is then required to execute and return the amendment to the franchisor within ten business days of receipt. Failure to do so constitutes a default under the Franchise Agreement, potentially leading to termination.
In the event of an acquisition, the lender is obligated to fulfill all franchisee obligations under the Franchise Agreement that exist or accrue after the acquisition date, including fee payments. Any transfer conditions that the Embassy Suites franchisor deems relevant will apply to the assumption. The lender must also provide all necessary information to determine if they are a Sanctioned Person within ten business days of the franchisor's request. If the lender acquires possession or ownership of the hotel due to an acquisition, they are considered to have assumed the Franchise Agreement from the acquisition date.