What is the meaning of 'Event of Default' in the context of the security agreement for Springhill Suites By Marriott?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
- **9.
Default**.The occurrence of any of the following shall constitute an "Event of Default" hereunder:
(a) A failure by any Grantor, the Company or any Guarantor to observe or perform any obligation, covenant, condition, or agreement in this Security Agreement or any other MICC Loan Document that involves the payment of money, including without limitation, the occurrence of any event identified as one of the "Guaranteed Events" in section 1.3 of the Guaranty;
(b) A failure by any Grantor, the Company or any Guarantor to observe or perform any nonmonetary obligation, covenant, condition, or agreement in this Security Agreement or any other MICC Loan Document to be performed by any Grantor, the Company or any Guarantor, including without limitation, the occurrence of any event identified as one of the "Guaranteed Events" in section 1.3 of the Guaranty;
(c) If any Grantor, the Company or any Guarantor shall make an assignment for the benefit of creditors, or if any Grantor shall generally not be paying its debts as they become due;
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, an "Event of Default" within the security agreement is specifically defined in Section 9. This section outlines the circumstances that would trigger a default status.
These circumstances include failure by any Grantor, the Company, or any Guarantor to meet any financial obligations outlined in the security agreement or any other MICC Loan Document. This includes failing to fulfill any of the "Guaranteed Events" specified in section 1.3 of the Guaranty. Additionally, an Event of Default occurs if any of the aforementioned parties fail to uphold any nonmonetary obligations, covenants, conditions, or agreements within the same documents, again including any event identified as one of the "Guaranteed Events" in section 1.3 of the Guaranty.
Furthermore, an Event of Default is triggered if any Grantor, the Company, or any Guarantor makes an assignment for the benefit of creditors, or if any Grantor is generally not paying its debts as they become due. In practical terms, this means that Springhill Suites By Marriott franchisees must adhere to all financial and non-financial obligations detailed in the Security Agreement and related loan documents to avoid being declared in default, which could have significant repercussions on their franchise agreement.