Is an unapproved assignment of the Even Hotels agreement by the franchisee considered an Event of Default?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
12.4 Termination Due to an Event of Default. Upon the occurrence of an Event of Default specified in subsections 12.3(b), 12.3(c), 12.3(d), 12.3(g) for any breach of Section 13, 12.3(i), or 12.3(k) (or for an Event of Default under Section 12.3(g) for failing to establish or maintain funds in a Reserve Account), the Agreement may be terminated immediately, without notice, and all amounts payable hereunder shall be immediately due and payable in full, provided that any disputed amounts shall be handled in accordance with Section 5.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, an unapproved assignment of the franchise agreement by the franchisee constitutes an Event of Default. Specifically, Section 12.3(b) states that "Any assignment of the Agreement by you in violation of Section 11.1" is considered an Event of Default.
This means that if an Even Hotels franchisee attempts to transfer their rights or obligations under the franchise agreement without obtaining the franchisor's consent as required by Section 11.1, the franchisor has grounds to declare the franchisee in default.
An Event of Default can lead to serious consequences, including termination of the franchise agreement. According to subsection 12.4, upon the occurrence of an Event of Default specified in subsection 12.3(b), the agreement may be terminated immediately, without notice, and all amounts payable hereunder shall be immediately due and payable in full, provided that any disputed amounts shall be handled in accordance with Section 5.