Is an Even Hotels franchisee allowed to pledge or encumber the Equipment in any manner?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.3.
Liens and Encumbrances.
Hotel covenants that it will not pledge or encumber any of the Equipment or the interest of HPFS in the Equipment in any manner whatsoever nor create or permit to exist any levy, lien or encumbrance thereof or thereon except those created by or through HPFS.
The Equipment shall remain the personal property of HPFS (during the initial 48-month Term) whether or not affixed to realty and shall not become a fixture or be made to become a part of any real property on which it is placed without the prior written consent of HPFS.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, franchisees are restricted from pledging or encumbering equipment. The FDD states that the franchisee, referred to as 'Hotel' in this context, is prohibited from using the equipment as collateral or creating any liens against it. This restriction protects the interests of HPFS (presumably a financing entity) in the equipment.
This provision ensures that HPFS retains clear ownership and control over the equipment, which is crucial for their financial security. The equipment remains the personal property of HPFS during the initial 48-month term, regardless of whether it's attached to the property. This prevents the equipment from being considered part of the real estate without HPFS's explicit written consent.
For a prospective Even Hotels franchisee, this means they cannot use the equipment to secure loans or other financial obligations. This could impact their ability to obtain financing for other aspects of the business. It is important for franchisees to understand these restrictions and factor them into their financial planning. They should also confirm the identity of HPFS and the specific terms of the IHG-HPFS agreement to fully understand their obligations.
This type of restriction is common in franchising, particularly when equipment is leased or financed through a third party. It protects the lender's investment and ensures they have recourse in case of default. Franchisees should carefully review all equipment-related agreements to understand their rights and responsibilities.