By when must the lender notify Embassy Suites By Hilton that it wants the Additional Period?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
If the default is for failure to comply with physical standards or other non-monetary default which could only be cured by Lender acquiring possession and/or ownership of the Hotel (each, an "Acquisition"), Lender may have an additional period of one hundred eighty (180) calendar days, commencing at the expiration of Lender's Cure Period, for Lender to complete its Acquisition, through foreclosure or other appropriate proceedings ("Additional Period"); provided that Lender must: (i) notify Franchisor no later than the date it commences proceedings (or promptly after action is stayed or enjoined) that Lender wants the Additional Period; (ii) commence proceedings and diligently prosecute such proceedings to completion; and (iii) comply with the obligations of Franchisee under the Franchise Agreement not being performed by Franchisee during the Additional Period including payment of all monetary obligations but excluding those obligations which can only be performed by Franchisee or which Lender cannot perform without possession and/or ownership of the Hotel.
Source: Item 23 — RECEIPTS (FDD pages 97–304)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, if a lender seeks an Additional Period to complete the acquisition of a hotel due to the franchisee's non-monetary default (such as failing to comply with physical standards), the lender must notify Embassy Suites By Hilton no later than the date it commences proceedings. This notification is required when the lender wants the Additional Period to complete the acquisition through foreclosure or other appropriate proceedings. If action is stayed or enjoined, the lender must notify Embassy Suites By Hilton promptly after action is stayed or enjoined.
This requirement ensures that Embassy Suites By Hilton is informed about the lender's intentions and actions regarding the property. It allows Embassy Suites By Hilton to monitor the situation and protect its interests, including maintaining brand standards and ensuring the continued operation of the hotel. The lender must also commence proceedings and diligently pursue them to completion and comply with the franchisee's obligations under the Franchise Agreement during the Additional Period, except for those obligations that only the franchisee can perform or that the lender cannot perform without possession or ownership of the hotel.
For a prospective Embassy Suites By Hilton franchisee, this clause highlights the importance of maintaining compliance with the franchise agreement to avoid default. It also clarifies the lender's responsibilities and timelines in the event of a default, providing a framework for how the lender can rectify the situation while keeping Embassy Suites By Hilton informed. This arrangement aims to balance the interests of the franchisee, the lender, and Embassy Suites By Hilton, ensuring that the hotel continues to operate under the brand's standards even during financial difficulties.