Do the transfer provisions of the Embassy Suites Franchise Agreement apply to a sale by the lender after an Assumption?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Lender's Sale to Third Party After Assumption. The transfer provisions of the Franchise Agreement will apply to any sale, assignment or transfer by Lender after an Assumption. If the transfer is to a third party who desires to continue to operate the Hotel, these provisions require a change of ownership application, approval of the third party and payment of an application fee.
- 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 the 2025 Embassy Suites Franchise Disclosure Document, the transfer provisions of the Franchise Agreement do apply to a sale, assignment, or transfer by the lender after an Assumption. If the transfer is to a third party who wants to continue operating the hotel, the third party is required to complete a change of ownership application, gain approval, and pay an application fee.
This means that if a lender takes over an Embassy Suites hotel due to the franchisee's default and then decides to sell the hotel to a new owner, that sale is subject to the standard transfer requirements outlined in the Embassy Suites Franchise Agreement. These requirements ensure that any new owner meets Embassy Suites's standards and is financially capable of running the franchise.
For a prospective Embassy Suites franchisee, this clause provides some assurance that if their hotel were to fall into the hands of a lender, any subsequent sale of the property would not be to just anyone. Embassy Suites retains the right to vet and approve the new owner, maintaining brand standards and protecting the interests of other franchisees. The lender is also obligated to notify Embassy Suites contemporaneously with the commencement of any action that may result in an Acquisition.