Under what circumstances related to debt payment would an Even Hotels licensee be considered in default?

According to Even Hotels' 2025 Franchise Disclosure Document, there are several circumstances related to debt payment that could lead to immediate termination of the license agreement. Specifically, Even Hotels can terminate the license immediately if the licensee or any guarantor: generally fails to pay debts as they become due; admits in writing their inability to pay debts; or makes a general assignment for the benefit of creditors. These stipulations ensure that Even Hotels is protected if the franchisee faces severe financial distress.

Additionally, Even Hotels can terminate the license if the licensee or any guarantor commences any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors. This also applies if they seek the appointment of a receiver, trustee, custodian, or other similar official for it or for all or any substantial part of its property. Furthermore, taking any corporate or other action to authorize any of the actions mentioned above can also result in immediate termination.

Another scenario that could lead to termination is if a case, proceeding, or other action is commenced against the licensee or any guarantor seeking an order for relief as a debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition of its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors. This includes seeking the appointment of a receiver, trustee, custodian, or other similar official for it or for all or any substantial part of its property, and such case, proceeding or other action results in the entry of any order for relief against it which is not fully stayed within seven business days after the entry thereof or remains undismissed for a period of 45 days. Finally, if an attachment remains on all or a substantial part of the Hotel or of Licensee's or any Guarantor's assets for 30 days, Even Hotels may terminate the license agreement immediately.

For a prospective Even Hotels franchisee, these terms highlight the critical importance of maintaining financial stability and meeting debt obligations. Failure to do so can result in the immediate termination of the license, leading to significant financial repercussions, including the payment of liquidated damages as detailed elsewhere in the FDD. Franchisees in California should note the amendment regarding bankruptcy enforceability as outlined in Exhibit B-2.