What is the Lender required to do in connection with the Assumption of the Embassy Suites By Hilton franchise?
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 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).
Source: Item 23 — RECEIPTS (FDD pages 97–304)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton FDD, if a lender acquires possession or ownership of a hotel due to an acquisition, the lender is considered to have assumed the Franchise Agreement as of that date. The lender is then obligated to fulfill all of the franchisee's obligations under the Franchise Agreement that existed or accrued after the acquisition, including paying any owed fees to Embassy Suites By Hilton. The lender must also comply with any relevant transfer conditions in the Franchise Agreement, such as submitting their ownership structure, organizational documents, and proof of insurance.
Within ten business days of receiving a request from Embassy Suites By Hilton, the lender must provide all necessary information to determine if they are a Sanctioned Person, along with any other reasonably requested information. If Embassy Suites By Hilton confirms that the lender is not a Sanctioned Person, they will promptly prepare an assumption agreement to document the assumption and deliver it to the lender. The lender must then execute and return this agreement within ten business days of receipt. Failure to do so may be considered a default under the Franchise Agreement, potentially leading to termination.
In place of a transfer or application fee for the assumption, the lender must pay Embassy Suites By Hilton a processing fee. This fee is equivalent to the permitted transfer fee outlined in the Franchise Agreement. However, if the Franchise Agreement does not specify a transfer fee, the processing fee will be $5,500. Furthermore, any renovation requirements imposed by Embassy Suites By Hilton in connection with the assumption cannot exceed what they could have required if the original franchisee had remained in control.