Under what conditions will the Embassy Suites letter agreement automatically terminate?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
This letter agreement will be effective only when Franchisor receives signatures indicating acceptance by Lender and Franchisee and Franchisor's authorized representative countersigns on the signature page.
If Franchisor does not receive signed copies from Lender and Franchisee within thirty (30) days from the date indicated on the first page of this letter agreement, Franchisor's offer to enter into this letter agreement may be withdrawn.
Once effective, this letter agreement will automatically terminate if (a) Lender no longer has a security interest in Franchisee or the Loan is paid in full, (b) Lender transfers the Loan to another entity unless this letter agreement is assigned in compliance with its terms, (c) Lender materially breaches this letter agreement, (d) Lender has been taken over in any manner by any state or federal agency, (e) Franchisee transfers the Franchise Agreement and the transfer results in a new franchise agreement being entered, or (f) Franchisor terminates the Franchise Agreement in accordance with this letter agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 FDD, the Embassy Suites letter agreement will automatically terminate under specific conditions related to the lender, franchisee, and the franchise agreement itself. The letter agreement becomes effective once Embassy Suites receives signatures from the lender and franchisee, and an authorized representative of Embassy Suites countersigns the agreement. However, this offer can be withdrawn if Embassy Suites does not receive the signed copies within 30 days from the date indicated on the first page of the agreement.
Specifically, the letter agreement will automatically terminate if the lender no longer holds a security interest in the hotel, or if the loan is paid in full. It also terminates if the lender transfers the loan to another entity, unless the letter agreement is properly assigned according to its terms. A material breach of the letter agreement by the lender will also result in automatic termination. Furthermore, if the lender is taken over by any state or federal agency, the agreement is terminated.
Additionally, the Embassy Suites letter agreement terminates automatically if the franchisee transfers the franchise agreement, resulting in a new franchise agreement. Finally, Embassy Suites can terminate the letter agreement if it terminates the franchise agreement according to the terms outlined within the letter agreement itself. These conditions ensure that the letter agreement remains relevant and enforceable only under specific circumstances related to the ongoing financial and operational status of the hotel and the involved parties.