Can an owner of a Springhill Suites By Marriott hotel pledge the Franchise Agreement as collateral?

According to the 2025 Springhill Suites By Marriott Franchise Disclosure Document, an owner is not allowed to pledge the Franchise Agreement as collateral or grant a security interest in the agreement. However, the owner and each interest holder in the owner may grant a lien or other security interest in the hotel or the revenues from the hotel. They can also pledge ownership interests in the owner or a control affiliate as collateral for financing the hotel.

If a person exercises their rights under a lien, security interest, or pledge, Springhill Suites By Marriott retains specific rights as outlined in Section 8.1 of the agreement and Section 19.1 of the Franchise Agreement. This means that while franchisees can use the hotel's assets or their ownership interests to secure financing, the Franchise Agreement itself cannot be used as collateral.

This restriction protects Springhill Suites By Marriott by preventing the transfer of the franchise to an unapproved party through a foreclosure or similar action. It ensures that the brand maintains control over who operates a Springhill Suites By Marriott hotel and that any potential new owner meets their standards and qualifications. This is a fairly standard clause in franchise agreements, as franchisors want to carefully control who is associated with their brand.