Under what circumstances can the confidentiality provisions of the letter agreement be disclosed by the Lender or Franchisee to a third party regarding an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The provisions of this letter agreement shall not be disclosed by Lender or Franchisee to any third party, excepting (a) the respective employees, directors, officers, agents, regulators or legal and financial representatives of each of Franchisee, Lender and Lender's servicers, trustees and certificate holders, on a need-to-know basis; (b) as required by law; (c) as mutually agreed to by the parties; (d) as part of any due diligence performed as a part of a sale, assignment, participation or securitization of the Loan by Lender, or a sale of the Hotel after an Acquisition; (e) any investor or potential investor in, or underwriter of, the Loan; and/or (f) any rating agency that rates securities backed by the Loan. Except as provided above, Franchisee and Lender agree not to copy, reproduce or otherwise make available in any form whatsoever to any other person, firm, corporation, or business the provisions of this letter agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the confidentiality provisions within the letter agreement between the Lender and Franchisee have specific exceptions that allow for disclosure to third parties. These exceptions outline the circumstances under which the terms of the agreement can be shared without breaching confidentiality.
The Lender or Franchisee can disclose the letter agreement's provisions to their respective employees, directors, officers, agents, regulators, or legal and financial representatives if they have a legitimate need to know the information. Disclosure is also permitted if required by law, or if all parties involved mutually agree to the disclosure. This ensures that necessary parties are informed while maintaining confidentiality where possible.
Additionally, the Lender can disclose the provisions as part of due diligence during a sale, assignment, participation, or securitization of the loan, or during a sale of the hotel following an acquisition. The terms can also be shared with any investor, potential investor, or underwriter of the loan, as well as any rating agency that rates securities backed by the loan. However, outside of these explicitly stated exceptions, both the Franchisee and Lender are prohibited from copying, reproducing, or making the letter agreement available to any other person, firm, corporation, or business.