What are the conditions under which the Lender is responsible for post-termination de-identification obligations at the Hotel for an Embassy Suites By Hilton franchise?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender shall not be liable for any termination fees or liquidated damages arising from the early termination of the Franchise Agreement; provided, however, if Lender or its designee is or comes into possession of the Hotel before the Waiver Notice is effective, then Lender shall be responsible for posttermination de-identification obligations at the Hotel, and for payment of any fees owed to Franchisor pursuant to the Franchise Agreement that accrued while Lender was in possession of the Hotel before the Waiver Notice is effective, but excluding termination fees or liquidated damages.
Source: Item 23 — RECEIPTS (FDD pages 97–304)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, a lender may become responsible for post-termination de-identification obligations at the hotel. This occurs if the lender or its designee takes possession of the hotel before a Waiver Notice is effective. The Waiver Notice refers to the lender's written notice to the franchisor that they are waiving their right to assume the Franchise Agreement.
In practical terms, this means that if a lender forecloses on an Embassy Suites By Hilton hotel and begins operating it before formally notifying the franchisor that they will not be assuming the franchise agreement, the lender is responsible for removing all Embassy Suites By Hilton branding and trademarks from the property if the franchise agreement is terminated. This could include signage, logos, and any other identifying marks.
This provision protects Embassy Suites By Hilton's brand integrity by ensuring that a hotel no longer operating under the brand standards does not continue to represent itself as an Embassy Suites By Hilton. For a potential franchisee, this highlights the importance of understanding the lender's rights and obligations in the event of financial distress, as it could impact the de-identification responsibilities and costs associated with the property.