What is an 'Assumption Agreement' in the context of the Embassy Suites By Hilton Franchise Agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
If Lender confirms that Lender is not a Sanctioned Person, Franchisor will promptly prepare Franchisor's then-current form assumption agreement ("Assumption Agreement") to document the Assumption, and deliver the Assumption Agreement to Lender.
Lender must execute and return the Assumption Agreement to Franchisor within ten (10) business days after receipt from Franchisor.
Lender's failure to timely execute and deliver the Assumption Agreement may be deemed a default under the Franchise Agreement entitling Franchisor to terminate the Franchise Agreement.
Any renovation requirements imposed by Franchisor in connection with the Assumption will not exceed those which Franchisor could have imposed had Franchisee remained as the Franchisee under the Franchise Agreement.
In lieu of any transfer or application fee for the Assumption, Lender agrees to pay Franchisor
Source: Item 23 — RECEIPTS (FDD pages 97–304)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, an 'Assumption Agreement' is a document used to formalize the assumption of the Franchise Agreement by a lender who acquires possession or ownership of the hotel due to an acquisition. If the lender acquires the hotel, they are considered to have assumed the Franchise Agreement from the date of acquisition, which includes fulfilling all obligations of the franchisee, such as paying fees.
Before the Assumption Agreement is prepared, Embassy Suites By Hilton will need to confirm that the Lender is not a Sanctioned Person. Once this is confirmed, Embassy Suites By Hilton will prepare their current form of the Assumption Agreement and deliver it to the Lender. The lender is then required to execute and return the Assumption Agreement within ten business days of receipt. Failure to do so may be considered a default under the Franchise Agreement, potentially leading to termination.
The Assumption Agreement also addresses fees and renovations. Instead of a transfer or application fee, the lender may need to pay a processing fee equal to the permitted transfer fee outlined in the Franchise Agreement. If no transfer fee is referenced, the processing fee will be $5,500. Any renovation requirements imposed by Embassy Suites By Hilton must not exceed what would have been required if the original franchisee remained in control.
This process ensures that if a lender takes over a hotel, they formally agree to the terms of the Franchise Agreement, maintaining the standards and obligations associated with the Embassy Suites By Hilton brand. It also protects Embassy Suites By Hilton's interests by ensuring the lender is not a Sanctioned Person and that any necessary renovations are completed.