What is a '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 notice 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 can exercise its rights against the franchisee, potentially leading to the termination of the Franchise Agreement. This protects Embassy Suites By Hilton's interests in maintaining brand standards and operational consistency, as it avoids being forced to work with a lender who may not be suitable as a franchisee.
However, the lender is not entirely free from obligations. If the lender possesses the hotel before the Waiver Notice takes effect, they are responsible for the costs of de-identifying the hotel post-termination and for any fees owed to Embassy Suites By Hilton that accrued during their possession, excluding termination fees or liquidated damages. This provision ensures that Embassy Suites By Hilton is not left bearing the financial burden of a lender's temporary control over the hotel.
This clause is included in the Mezzanine Lender Comfort Letter, which outlines the relationship between Embassy Suites By Hilton, the franchisee, and the lender. It balances the lender's need to protect their investment with Embassy Suites By Hilton's need to maintain control over its brand and franchise system. Prospective franchisees should understand the circumstances under which a lender might issue a Waiver Notice and the potential consequences for their franchise agreement.