What is the definition of 'Assumption' in the context of the Embassy Suites By Hilton Franchise Agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Embassy Suites By Hilton's 2025 Franchise Disclosure Document, "Assumption" refers to the situation where a lender acquires possession and/or ownership of the hotel as a result of an Acquisition. In this case, the lender is considered to have assumed the Franchise Agreement from the date of the Acquisition. This means the lender becomes responsible for all of the franchisee's obligations under the Franchise Agreement that exist or accrue after the Acquisition date, including paying any fees owed to Embassy Suites By Hilton.
In connection with the Assumption, the lender must also address any outstanding defaults that they couldn't resolve before the Acquisition. The timeframe for curing these defaults will be determined by Embassy Suites By Hilton, taking into account the nature of the default and the condition of the hotel at the time of the lender's Acquisition.
Within ten business days of Embassy Suites By Hilton's request, the lender must provide all necessary information to allow Embassy Suites By Hilton to determine that the lender is not a Sanctioned Person, along with any other reasonably requested documents regarding the lender's ownership structure. Embassy Suites By Hilton will then prepare an amendment to the Franchise Agreement to document the Assumption and deliver it to the lender. The lender must execute and return this amendment within ten business days of receipt, or risk defaulting on the Franchise Agreement, which could lead to termination. In lieu of a transfer or application fee, the lender will pay Embassy Suites By Hilton a processing fee equal to the permitted transfer fee in the Franchise Agreement. If the Franchise Agreement does not reference a permitted transfer fee, then the processing fee will be Five Thousand Five Hundred Dollars ($5,500).
Any renovation requirements imposed by Embassy Suites By Hilton in connection with the Assumption will not exceed what they could have required if the original franchisee had remained in place. This provides some assurance to the lender regarding potential renovation costs. The transfer provisions of the Franchise Agreement will apply to any subsequent sale, assignment, or transfer by the lender after the Assumption, including the need for a change of ownership application, approval of the third party, and payment of an application fee if the transfer is to a third party who desires to continue operating the Hotel.