Under what condition can the lender of an Embassy Suites franchise get an additional cure period?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender shall have the right, but not the obligation, to cure the default within fifteen (15) calendar days beyond the expiration of any cure period given to Franchisee ("Lender's Cure Period"). If the default is for failure to comply with physical standards or other non-monetary default which could only be cured by Lender acquiring possession and/or ownership of the Hotel (each, an "Acquisition"), Lender may have an additional period of one hundred eighty (180) calendar days, commencing at the expiration of Lender's Cure Period, for Lender to complete its Acquisition, through foreclosure or other appropriate proceedings ("Additional Period"); provided that Lender must: (i) notify Franchisor no later than the date it commences proceedings (or promptly after action is stayed or enjoined) that Lender wants the Additional Period; (ii) commence proceedings and diligently prosecute such proceedings to completion; and (iii) comply with the obligations of Franchisee under the Franchise Agreement not being performed by Franchisee during the Additional Period including payment of all monetary obligations but excluding those obligations which can only be performed by Franchisee or which Lender cannot perform without possession and/or ownership of the Hotel.
On request by Lender, the Additional Period may be further extended by Franchisor in its determination, which determination shall take into consideration the period of time required to complete an Acquisition in the applicable jurisdiction, and any period of time in which Lender's action has been stayed or enjoined.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, a lender may be granted an additional cure period under specific circumstances related to defaults on the franchise agreement. If the franchisee's default involves non-monetary issues, such as failure to comply with physical standards, that can only be resolved if the lender takes possession or ownership of the hotel, the lender may receive an additional 180 calendar days to complete the acquisition. This extended period begins after the initial Lender's Cure Period expires.
However, to qualify for this additional period, the lender must meet certain requirements. First, the lender must notify Embassy Suites that they want the Additional Period no later than when they start proceedings, or promptly after any action is stayed or stopped by an injunction. Second, the lender must start proceedings to acquire the hotel and diligently continue those proceedings until they are completed within the Additional Period. Third, the lender must fulfill the franchisee's obligations under the Franchise Agreement that the franchisee is not performing during the Additional Period. This includes paying all monetary obligations, except for those that only the franchisee can perform or those the lender cannot perform without possessing the hotel.
Furthermore, Embassy Suites may extend the Additional Period if the lender requests it. In making this decision, Embassy Suites will consider how long it will take to complete the acquisition in the relevant jurisdiction and any time during which the lender's actions were stayed or enjoined. This provision aims to provide lenders with sufficient time to rectify defaults and maintain the standards of the Embassy Suites franchise, while also protecting the interests of the brand.