What happens to the Springhill Suites By Marriott agreement upon termination of the Franchise Agreement?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will immediately terminate upon termination of the Franchise Agreement; except in the event that Marriott consents to or approves the transaction (including a sale of the Hotel or other transfer requiring the consent of Marriott) pursuant to which the Franchise Agreement is terminated, in which case this Agreement may be assigned as set forth in any such consent or approval.
Franchisee acknowledges that Marriott may be damaged in several ways upon e. termination of this Agreement pursuant to Paragraph 7.b or Paragraph 7.c (an "Event Termination").
Franchisee acknowledges that certain costs and expenses related to the Hotel's participation in the Programs, as allocated to Franchisee pursuant to Paragraph 3 and Attachment A (including all of those costs allocated pursuant to Exhibits attached thereto), have already been incurred by Marriott or accrued by Franchisee prior to the date of the Event Termination ("Prior Costs").
Furthermore, certain costs and expenses related to the Hotel's participation in the Programs, as allocated or allocable to Franchisee pursuant to Paragraph 3 and Attachment A and the Exhibits thereto, to be incurred by Marriott or accrued by Franchisee, after the Event Termination ("Future Costs") may not be recoverable.
Source: Item 17 — , "Renewal, Termination, Transfer, and Dispute Resolution," is amended by the addition of the following paragraph(s) at the conclusion of the Item: (FDD pages 285–553)
What This Means (2025 FDD)
According to the 2025 Springhill Suites By Marriott Franchise Disclosure Document, the agreement in question will immediately terminate upon the termination of the Franchise Agreement. However, there is an exception: if Marriott consents to or approves a transaction that leads to the termination of the Franchise Agreement, such as a sale of the hotel, the agreement may be assigned as outlined in Marriott's consent or approval. This means that in most cases, the agreement ends when the franchise ends, but Marriott retains the right to transfer the agreement to a new owner under specific circumstances.
This provision is important for prospective Springhill Suites By Marriott franchisees because it clarifies the conditions under which their contractual obligations cease. Typically, termination of the franchise means the end of the agreement. However, franchisees need to be aware that Marriott has the discretion to assign the agreement to a new party if the hotel is sold or transferred, which could impact their responsibilities during and after the transition.
Furthermore, the FDD states that Marriott may incur costs and expenses related to the hotel's participation in programs before and after the termination event. These costs, allocated to the franchisee, may include 'Prior Costs' incurred before the termination and 'Future Costs' that may not be recoverable after the termination. This highlights a potential financial consideration for franchisees, as they may be responsible for certain expenses even after the franchise agreement ends, depending on the specific circumstances and Marriott's allocations.