What is the definition of 'Waiver Notice' in the context of an Embassy Suites By Hilton franchise agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
Lender may give written notice (a "Waiver Notice") to Franchisor of Lender's election to waive Lender's right to assume the Franchise Agreement at any time (i) during Lender's Cure Period, or the Additional Period, as the Additional Period may be extended in accordance with Subparagraph 1(b) of this letter agreement, or (ii) within twenty (20) calendar days after the completion of the Acquisition.
If given, the Waiver Notice will be effective twenty (20) calendar days after Franchisor's receipt of the Waiver Notice, and Franchisor may rely on the Waiver Notice to exercise its remedies against Franchisee under the Franchise Agreement, including termination of the Franchise Agreement.
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 FDD, a 'Waiver Notice' is a written notification from the lender to Embassy Suites By Hilton, indicating the lender's decision to waive their right to assume the Franchise Agreement. This notice can be given during the Lender's Cure Period or an Additional Period, or within 20 calendar days after the completion of the Acquisition.
The implications of a Waiver Notice are significant. Once the notice is effective (20 calendar days after Embassy Suites By Hilton receives it), Embassy Suites By Hilton has the right to exercise its remedies against the franchisee, including terminating the Franchise Agreement. This protects Embassy Suites By Hilton's interests in maintaining brand standards and operational consistency, even if the original franchisee defaults on their loan.
However, the lender is not liable for termination fees or liquidated damages resulting from the early termination of the Franchise Agreement, unless the lender or its designee takes possession of the hotel before the Waiver Notice becomes effective. In that case, the lender is responsible for post-termination de-identification obligations and any fees owed to Embassy Suites By Hilton that accrued while the lender was in possession, excluding termination fees or liquidated damages. This provision ensures that Embassy Suites By Hilton is not left with unpaid fees or the cost of removing branding if the lender temporarily operates the hotel.
This clause is typical in franchise agreements to protect the franchisor's brand and standards when a franchisee faces financial difficulties and a lender becomes involved. Prospective Embassy Suites By Hilton franchisees should understand the circumstances under which a lender might issue a Waiver Notice and the potential consequences for their franchise agreement.