What are the procedures for Even Hotels franchisees to follow in the event of condemnation or casualty affecting the hotel?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
10. Condemnation And Casualty:
A. Condemnation.
Licensee shall, at the earliest possible time, give IHG full notice of any proposed taking of all or any part of the Hotel by eminent domain. In the event that the Hotel or a substantial part thereof is to be taken, such that continued operation of the Hotel in accordance with the Standards is no longer possible, IHG will give due and prompt consideration, without any obligation by either party, to changing the site of the Hotel to a nearby location selected by Licensee, and approved by IHG, as promptly as reasonably possible and in any event within four months of the taking; provided, that Licensee has promptly filed an application to change the Location of the Hotel. Such application would not require payment to IHG of any additional franchise application fee. If the condemnation of all or any material part of the Hotel building occurs in the last two years of the License Term, this License shall automatically terminate effective upon the date of the taking. If the new location and Licensee's application are approved by IHG, Licensee shall promptly execute an addendum to this License substituting the new location, and Licensee shall open a new hotel at the new location in accordance with IHG's specifications within two years of the closing of the Hotel if the new hotel is a new development or within one year of the closing of the Hotel if the new hotel is a conversion of an existing building and the new hotel will thenceforth be deemed to be the Hotel licensed under this License. If a condemnation takes place and a new hotel is not, for whatever reason, going to become the Hotel under this License (or if it is reasonably evident to IHG that such will be the case), this License will terminate forthwith upon notice thereof by IHG to Licensee and Licensee shall have no liability for the liquidated damages set forth in paragraph 11.E. of this License.
B. Casualty.
If the Hotel is damaged by fire or other casualty, Licensee will immediately notify IHG and expeditiously repair the damage; provided, however, if all or virtually all of the Hotel is destroyed by such fire or other casualty, either IHG or (unless caused by the intentional act of Licensee or its agent) Licensee may terminate this License by fifteen days prior notice to the other delivered within sixty days of the date of the fire or other casualty. If Licensee terminates this License in accordance with this provision, Licensee shall have no liability for the liquidated damages set forth in paragraph 11.E. of this License so long as neither Licensee nor any of its Affiliates, either directly or through another person or entity, develops, leases or operates the site as a hotel or other lodging or residential facility of any kind or sort for at least five years following the date of termination (or the originally scheduled termination date of this License, if earlier) other than pursuant to another license with IHG.
Unless this License is terminated properly pursuant to the foregoing provision, Licensee will close the Hotel if required by the extent of the damage or if otherwise required by IHG; will repair or rebuild the Hotel in accordance with IHG's Standards; will commence reconstruction within six months after the fire or other casualty; will expeditiously continue on an uninterrupted basis with such reconstruction; and will, if the Hotel was closed, reopen the Hotel for continuous business operations as soon as practicable (but in any event within twenty-four months after the fire or other casualty), giving IHG at least forty-five days advance notice of the date of reopening if the Hotel was closed. If the Hotel was closed, Licensee may not reopen the Hotel or promote or otherwise hold the Hotel out as a hotel in the Brand System unless and until IHG determines that the reconstruction is completed in accordance with IHG's then current Standards. If the Hotel is not required to be closed, all work to repair damage shall be conducted so as to minimize interference with the Hotel's operation and guests. If the damage is not repaired in accordance with this paragraph, this License will forthwith terminate upon notice thereof by IHG to Licensee and Licensee shall be responsible for full liquidated damages under paragraph 11.E. of this License. Notwithstanding anything else herein to the contrary, during the time the Hotel is closed, Licensee shall pay IHG a monthly royalty of 2% of Gross Rooms Revenue based on the average monthly Gross Rooms Revenue for the preceding twelve months prior to the date of the fire or other casualty or, if the Hotel has not been in the Brand System for twelve months, based on the average monthly Gross Rooms Revenue for the period during which the Hotel has been in operation in the Brand System. Said payment shall be in lieu of all other Brand System fees under paragraph 3.B. of this License.
C. No Extensions of Term.
Nothing in this paragraph 10 will or is intended to extend the License Term.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, there are specific procedures for condemnation and casualty events.
In the event of condemnation, the franchisee must notify IHG (InterContinental Hotels Group) as soon as possible if any part of the hotel is being taken by eminent domain. If a substantial part of the hotel is taken, making it impossible to maintain standards, IHG will consider changing the hotel site to a nearby location selected by the franchisee and approved by IHG within four months, provided the franchisee promptly applies for the location change. No additional franchise application fee is required for this. If condemnation occurs in the last two years of the license term, the license automatically terminates. If a new location is approved, the franchisee must open a new hotel at the new site within two years for new developments or one year for conversions of existing buildings. If a new hotel is not feasible, the license terminates upon notice from IHG, and the franchisee is not liable for liquidated damages.
In the event of a casualty such as fire, the franchisee must immediately notify IHG and repair the damage quickly. However, if virtually all of the hotel is destroyed, either IHG or the franchisee (unless the casualty was intentional) can terminate the license with fifteen days' notice within sixty days of the event. If the franchisee terminates the license under these conditions, they will not be liable for liquidated damages, provided they do not develop, lease, or operate the site as a hotel or lodging facility for at least five years, unless under another license with IHG.
Unless the license is terminated, the franchisee must close the hotel if required, repair or rebuild according to IHG's standards, begin reconstruction within six months, continue without interruption, and reopen within twenty-four months, giving IHG forty-five days' notice. During closure, the franchisee pays a monthly royalty of 2% of Gross Rooms Revenue, based on the average monthly revenue for the twelve months prior to the casualty. Failure to repair the damage as required results in immediate termination of the license and liability for liquidated damages. These procedures do not extend the original license term.