Is Springhill Suites By Marriott required to receive a guaranty from the lender, and on what terms?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Franchisor's obligations under Paragraph 2.A. and 3 are subject to: (i) Franchisor's receipt of evidence satisfactory to Franchisor that any party with whom Franchisor enters into a franchise agreement under Paragraph 2.A., any of such party's directors, officers, and Affiliates, and any of their funding sources is not a Competitor, an Affiliate of a Competitor, or a Restricted Person; (ii) Lender or the receiver, as the case may be, and each of its Interestholders satisfying Franchisor's thencurrent owner qualifications; and (iii) Franchisor's receipt of a guaranty on terms acceptable to Franchisor, in its sole discretion.
C. If Lender acquires ownership, control or possession of the Hotel by foreclosure, a deed in lieu of foreclosure, or any other exercise of its rights as a secured lender, and Lender desires that the Hotel no longer be operated as part of the «brand» system of hotels, Lender will notify Franchisor of such desire within 10 days after Lender acquires ownership, control or possession of the Hotel, cooperate with Franchisor in the removal of the Hotel from the «brand» system of hotels, and promptly comply with Paragraph 12.
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, if a lender acquires ownership, control, or possession of the hotel through foreclosure or similar means, and desires to have the hotel continue operating under the Springhill Suites By Marriott brand, Springhill Suites By Marriott's obligations are subject to certain conditions. One of these conditions is that Springhill Suites By Marriott must receive a guaranty on terms acceptable to them, in their sole discretion.
This means that if a lender takes over a Springhill Suites By Marriott property and wants to maintain the franchise agreement, they must provide a guaranty that satisfies Springhill Suites By Marriott. The specific terms of this guaranty are not explicitly detailed in this section, but it is clear that Springhill Suites By Marriott has the final say on whether the terms are acceptable. This provision protects Springhill Suites By Marriott by ensuring that the new ownership has sufficient financial backing and commitment to uphold the standards of the franchise.
Furthermore, Springhill Suites By Marriott also requires that any party entering into a franchise agreement under these circumstances, along with their directors, officers, affiliates, and funding sources, must not be a competitor or a restricted person. Additionally, the lender or receiver must meet Springhill Suites By Marriott's current owner qualifications. These stipulations ensure that the integrity and standards of the Springhill Suites By Marriott brand are maintained even when there is a change in ownership due to foreclosure or other lender actions.
In the event that the lender wishes to remove the hotel from the Springhill Suites By Marriott system, they are required to notify Springhill Suites By Marriott within 10 days of acquiring ownership and cooperate in the removal process, complying with specific requirements outlined in the franchise agreement.