According to the Even Hotels agreement, what constitutes an 'Event of Default'?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
12 Term; Termination; Events Of Default
- 12.1 When the Agreement Takes Effect. The Agreement becomes effective only when approved by our Credit Department ("Effective Date").
We reserve the right to immediately suspend or terminate your account and the Agreement if you fail to meet our credit policies even if your account has been activated to submit transactions prior to your approval by our Credit Department.
- 12.2 Term of the Agreement. The initial term of the Agreement begins on the Effective Date and continues for three (3) years ("Initial Term"), unless terminated earlier as provided herein.
Thereafter, it shall continue on a month-to-month basis (each, an "Extended Term" and, together with the Initial Term, the "Term") until we or you terminate the Agreement upon written notice to the other as permitted under the Agreement.
If you have an equipment lease, termination of the Agreement does not terminate that equipment lease.
If you have rented equipment from us, termination of the Agreement does not relieve you of your obligation to make rental payments until the rented equipment is paid for in full or returned to us.
- 12.3 Events of Default.
Each event set forth below is an "Event of Default":
(a) A material adverse change in your business, financial condition, or business prospects.
(b) Any assignment of the Agreement by you in violation of Section 11.1.
(c) Any Material Change we did not consent to in violation of Section 11.2.
(d) Irregular Card sales by you, excessive Chargebacks, or any other circumstances which, in our sole discretion, may increase our exposure for your Chargebacks or otherwise present a financial or security risk to us.
(e) The occurrence of a Compromised Data Event (with respect to you) or a Data Security Event (with respect to us).
(f) Any of a party's representations, warranties, or covenants in the Agreement are breached in any respect.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, several conditions can trigger an 'Event of Default' under the Next-Gen Payments Agreement. These include a material adverse change in the franchisee's business, financial condition, or business prospects. Furthermore, any unauthorized assignment of the agreement or any material change made without the franchisor's consent also constitutes an event of default.
Other events of default for Even Hotels include irregular card sales, excessive chargebacks, or any circumstances that, in the franchisor's judgment, increase their exposure to chargebacks or present a financial or security risk. The occurrence of a Compromised Data Event affecting the franchisee or a Data Security Event affecting the franchisor is also considered a default. Finally, any breach of representations, warranties, or covenants made by either party in the agreement can lead to a default.
These 'Events of Default' are significant because they can lead to the termination of the agreement. The franchisor reserves the right to immediately suspend or terminate the franchisee's account if they fail to meet credit policies, even after the account has been activated. Understanding these conditions is crucial for prospective franchisees to avoid potential pitfalls and maintain a healthy business relationship with Even Hotels.