Under what circumstances can Holiday terminate the Even Hotels license agreement with cause?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
c. Requirements for you to Renew or Extend | N/A | The License does not provide for renewal or term extensions. If we agree to Re-license, you may be asked to sign a contract with materially different terms and conditions than your original contract. | | d. Termination by you | N/A | | | e. Termination by Holiday without | License: N/A | | | Cause | MTSS: 10.1 | | | f. Termination by Holiday with | License: 11.B, | Holiday may terminate with cause. | | Cause (Notes 1 and 2) | 11.C, 13.J and Attachment "B" MTSS: 10.3 | You pay liquidated damages if Holiday terminates under Paragraphs 12.1, 11.C or 13.J. See Note 1 and 2 | | g. "Cause" defined – defaults which can be cured (Note 2) | License: 11.B and 13.J | Any default other than those listed in "h" below. See Note 2. | | h. "Cause" defined – non-curable defaults | License: 10, 11.C & Attachment "B" | Non-curable defaults: bankruptcy; non dismissed judgments exceeding $50,000; trademark misuse, or if you contest Holiday's ownership of its trademarks; loss of possession of the property; dissolution of the licensee entity; failure to identify or operate the Hotel as a Holiday brand Hotel; violation of licensor's proprietary rights; unapproved transfers; conviction of a felony; false books and records; failure to comply with safety, security or privacy of guests or reputation standards; condemnation or casualty occurs and Hotel does not reopen when | | Provision | Section In Agreement | Summary | |-----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | required; unauthorized use of Marks; and, refusal to allow inspection or audit. | | i. Your obligations upon termination/non-renewal | License: 7.A., 11.D, 11.E, 13.J and Attachment "B" MTSS: 13.1 & Attachment 4-1 to Schedule 4 | Obligations include de-identification and payment of amounts due. | | j. Assignment of License by | License: 9.A | Holiday has rights of assignment to any | | Holiday | | person or legal entity. | | k. "Transfer" by Licensee definition | License: 9.B | Includes transfer of contract or assets (including real estate) or ownership changes. | | l. Holiday's approval of transfer | License: 9 | Holiday has the right to approve all | | by you | | transfers. | | m. Conditions for Holiday's approval of transfers | License: 9.C, 9.D, 9.E and 9.F | The prospective new owner of the Hotel or Licensee must submit an application and all fees to keep the Hotel in the Brand System. Holiday will evaluate the new owner's application using then-current procedures and criteria such as credit, operational abilities, market feasibility, previous business dealings and other factors it considers relevant. If Holiday approves the new owner, Holiday will require upgrading, signing of a License using the then-current form of License and the signing of a Guaranty. You must pay Holiday a non-refundable $25,000 processing fee at least 60 days before public offering, private placement or other sale of securities. | | n.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 87–90)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, Holiday, the parent company, can terminate the license agreement with cause. The FDD outlines two categories of defaults that constitute cause: defaults that can be cured and those that are non-curable.
Defaults that can be cured are defined as any default not listed under the non-curable defaults. Non-curable defaults include a range of serious issues such as bankruptcy, failure to dismiss judgments exceeding $50,000, trademark misuse, contesting Holiday's ownership of its trademarks, loss of possession of the property, dissolution of the licensee entity, failure to identify or operate the Hotel as a Holiday brand Hotel, violation of licensor's proprietary rights, unapproved transfers, conviction of a felony, false books and records, failure to comply with safety, security or privacy of guests or reputation standards, condemnation or casualty occurs and Hotel does not reopen when required, unauthorized use of Marks, and refusal to allow inspection or audit.
If Holiday terminates the Even Hotels license agreement with cause due to a franchisee's breach of obligations before the franchisee is authorized to use the system at their hotel, the franchisee must pay Holiday a lump sum. This sum is calculated based on the monthly average of amounts payable under specific paragraphs of the license, assuming the hotel had collected Gross Rooms Revenue based on the average daily revenue per available room for all "mature hotels" in the Brand System in the United States for the previous 12 months. "Mature hotels" are defined as those open for two full years or longer, licensed or managed by Holiday or its affiliates, and not in financial or quality default. The lump sum is then determined by multiplying this monthly average by the greater of 6 or the number of full and partial months from the Term Commencement Date to the termination date of the License.