Under the Even Hotels franchise agreement, for what liabilities is the franchisee responsible regarding card transactions submitted after an unapproved assignment or material change?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.3 Responsibility for Transactions. You are liable to us for all Chargebacks, Servicers Fees, Third Party Based Fees, and other liabilities arising in connection with: (a) any Card transactions submitted to us for processing by any assignee or transferee of the Agreement (or any part of the Agreement) not previously approved as such by us; and (b) any Card transactions submitted to us following any Material Change not previously approved by us in writing. We may collect amounts owed under this Section 11.3 by setting off or recouping against settlement funds, debiting your Settlement Account, debiting a Reserve Account, or in any other manner we are permitted to collect any other amounts under the Agreement.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, a franchisee is liable for specific financial obligations related to card transactions if they proceed with business changes without the franchisor's explicit consent. Specifically, Even Hotels franchisees are responsible for all Chargebacks, Servicers Fees, Third Party Based Fees, and other liabilities that arise from card transactions. This liability applies in two scenarios: first, if the franchisee assigns or transfers the franchise agreement (or any part of it) to another party without obtaining prior approval from Even Hotels; and second, if the franchisee undergoes a material change in their business operations that hasn't been pre-approved in writing by Even Hotels. Material Changes can include changes in control, mergers, liquidation, transfer of assets, or changes that could materially affect the products or services you sell, your procedures for payments acceptance, or your fulfillment of obligations to Cardholders.
Even Hotels has the right to collect these owed amounts through various methods. They can offset or recoup the dues from settlement funds, debit the franchisee's settlement account, debit a reserve account, or use any other collection method permitted under the agreement. This means that if a franchisee violates the terms of the agreement by making unapproved changes or assignments, they will bear the financial risk associated with any card transactions processed under the new, unapproved conditions.
This provision protects Even Hotels from financial risks associated with unapproved business changes by franchisees. It ensures that the franchisee remains responsible for financial obligations arising from card transactions, even if they have transferred the business or altered its operations without the franchisor's consent. Prospective franchisees should understand these conditions and the potential financial implications of non-compliance.