What is the purpose of the Amendment that the lender must enter into with Embassy Suites By Hilton after an Equity Acquisition?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
If Lender acquires ownership of the Franchisee by means of an Equity Acquisition, Lender will be deemed to have assumed the rights and obligations of the Franchisee under the Franchise Agreement as of the date of the Equity Acquisition, and Lender must diligently cure all defaults which Lender could not cure before the Equity Acquisition under the terms of Subparagraph 1(b), within the time period determined by Franchisor based on the nature of the default and/or the condition of the Hotel at the time of Lender's Equity Acquisition.
Lender must enter into an amendment to the Franchise Agreement to document the change of control of Franchisee, which will, among other things, contain a new ownership structure for Franchisee ("Amendment").
Subject to confirmation that Lender is not a Sanctioned Person, Franchisor will prepare the Amendment promptly after receipt of any information requested under this Subparagraph 2(c).
Franchisor will deliver the Amendment to Lender, and Lender will execute and return the Amendment to Franchisor within ten (10) business days after Franchisor delivers it.
Lender's failure to timely execute and deliver to Franchisor the Amendment shall be a default under the Franchise Agreement entitling Franchisor to terminate the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–304)
What This Means (2025 FDD)
According to the 2025 FDD, if a lender acquires ownership of the franchisee through an Equity Acquisition, the lender is considered to have assumed the franchisee's rights and obligations under the Franchise Agreement from the date of the Equity Acquisition. Following this, the lender must diligently address any defaults that they were unable to resolve before the Equity Acquisition, within a timeframe set by Embassy Suites By Hilton, based on the nature of the default and/or the condition of the hotel at the time of the Equity Acquisition.
The primary purpose of the Amendment to the Franchise Agreement is to formally document the change of control of the franchisee. This Amendment will specifically outline the new ownership structure for the franchisee. Embassy Suites By Hilton will prepare this Amendment after confirming that the lender is not a Sanctioned Person and receiving any necessary information.
The lender is required to execute and return the Amendment to Embassy Suites By Hilton within ten business days of receiving it. Failure to do so constitutes a default under the Franchise Agreement, which could lead to the termination of the agreement. This process ensures that Embassy Suites By Hilton maintains control over who operates its franchises and that the new ownership structure is clearly defined and legally documented.