In the context of an Embassy Suites By Hilton franchise acquisition, what is the definition of 'Assumption'?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Acquisition and Franchise Agreement Assumption. [DELETE FIRST SENTENCE ONLY IF ¶ 2(a) IS DELETED: If Lender does not deliver the Waiver Notice to Franchisor under Subparagraph 2(a), the Franchise Agreement will continue in full force and effect. ] If Lender acquires possession and/or ownership of the Hotel as the result of an Acquisition, Lender will be deemed to have assumed the Franchise Agreement as of the date of the Acquisition.
Lender will be obligated to perform all of the obligations of Franchisee under the Franchise Agreement existing at or accruing after the Acquisition date, including the payment of fees owed to Franchisor ("Assumption").
Any conditions in the transfer provisions of the Franchise Agreement that Franchisor deems relevant shall apply with respect to the Assumption, including but not limited to the obligation for Lender to submit its ownership structure, organizational documents and evidence of insurance.
Lender must, within ten (10) business days after receipt of a request from Franchisor, provide to Franchisor all information necessary for Franchisor to determine that Lender is not a Sanctioned Person (as defined below), as well as the other information reasonably requested.
If Franchisor 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, 'Assumption' refers to the lender's obligations when they acquire possession and/or ownership of the hotel due to an acquisition. In such cases, the lender is considered to have assumed the Franchise Agreement from the date of the acquisition. This means the lender is obligated to fulfill all responsibilities of the franchisee under the existing Franchise Agreement, including paying any owed fees to Embassy Suites By Hilton.
As part of the assumption, any relevant transfer provisions within the Franchise Agreement will apply to the lender. This includes providing organizational documents, ownership structure information, and evidence of insurance. The lender must also provide all necessary information within ten business days of Embassy Suites By Hilton's request to confirm they are not a Sanctioned Person. If the lender meets these requirements, Embassy Suites By Hilton will prepare an assumption agreement to document the assumption, which the lender must then execute and return within ten business days. Failure to do so may result in a default under the Franchise Agreement, potentially leading to termination.
Notably, any renovation requirements imposed by Embassy Suites By Hilton in connection with the assumption will not exceed what could have been imposed had the original franchisee remained in control. In place of a transfer or application fee for the assumption, the lender may be required to pay a processing fee. According to another section, this processing fee is $5,500 if the Franchise Agreement does not reference a permitted transfer fee.