For Even Hotels, what constitutes a 'Transfer' that could lead to termination of the Participation Agreement?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
the foregoing, or Licensee's assignee, engaged in fraud, deceit, violation of securities laws or other illegality in connection with Licensee's proposed or actual offer and/or sale of Securities. As with all other indemnification obligations set forth in this License, this specific indemnification obligation will survive the termination or expiration of this License.
F. Control Transfers.
Notwithstanding any other term or provision of this License to the contrary, neither this License nor any right or interest herein is assignable or transferable by Licensee.
If Licensee (i) receives an offer to purchase or lease the Hotel or any portion thereof, (ii) desires to sell or lease the Hotel or any portion thereof, or (iii) wishes to convey the Hotel, Hotel site, or any interest in the Hotel or Licensee, Licensee shall give prompt written notice thereof to IHG, stating the identity of the prospective transferee, purchaser or lessee and the terms and conditions of the conveyance, including a copy of any proposed agreement and all other information with respect thereto, that IHG may reasonably require.
Any (i) transfer of Equity Interests in an Entity (other than a transfer expressly permitted hereunder) or (ii) transfer of all or a material part of the Hotel or Hotel site (if the Hotel or Hotel site is owned directly or indirectly by Licensee or by a natural person or Entity that owns any Equity Interest in Licensee), to a new owner shall constitute a change of ownership requiring submittal of an application for a new license.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, a transfer that could lead to termination involves the conveyance of the hotel, hotel site, or any equity interest in the hotel or the licensee without IHG's approval. Specifically, if a change of ownership application for a proposed new owner is not submitted or is not approved by IHG, and the transfer occurs anyway, it is considered an unauthorized transfer.
This unauthorized transfer constitutes a material breach of the license agreement and an abandonment of the franchise by the licensee. Consequently, IHG has the right to exercise all remedies, including terminating the license agreement.
For a prospective Even Hotels franchisee, this means that any desire to sell the hotel, its site, or any ownership stake requires prior application to and approval from IHG. Failure to obtain this approval before the transfer can result in the termination of the franchise agreement. This is a fairly standard clause in franchise agreements to ensure the franchisor maintains control over brand standards and the quality of its franchisees.