What is an Even Hotels franchisee required to do to confirm the lien, security interest, and right of set-off?

The 2025 Even Hotels Franchise Disclosure Document addresses a franchisee's ability to grant a security interest in the real estate or other tangible assets of the hotel. According to the FDD, a franchisee may mortgage or otherwise grant a security interest in the real estate or other tangible assets of the Hotel (but specifically excluding this License or any right or interest herein) in connection with commercially reasonable financing for the Hotel with a third party bank or other commercial lending institution which is not a competitor of IHG or any of its Affiliates.

This means that Even Hotels franchisees are permitted to obtain financing for their hotel operations by using the real estate and tangible assets as collateral. However, this permission is conditional. The financing must be commercially reasonable, and the lender must be a third-party bank or commercial lending institution that does not compete with IHG or its affiliates. The franchise agreement itself cannot be used as collateral.

This policy protects Even Hotels by ensuring that the franchisee maintains control over the franchise license and that any financing arrangements do not involve competitors. For a prospective franchisee, this means they have the flexibility to seek financing using their hotel's assets, but they must adhere to the franchisor's restrictions on the type of lender and the terms of the financing. This ensures that the franchisee can secure necessary funding while safeguarding the franchisor's interests and the integrity of the Even Hotels brand.