Under what circumstances is Exhibit C applicable to a Springhill Suites By Marriott franchise agreement?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
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"Yield Management System" means any yield management system (including all Software, Hardware and electronic access) designated by Franchisor for use by System Hotels.
EXHIBIT C NEW DEVELOPMENT
Franchisee acknowledges that the Hotel is to be newly developed and constructed at the Approved Location under the terms of this Exhibit C and Section 4.4.
1. Construction of the Hotel.
- A. Construction Start Deadline. By the date stated in Item 13 of Exhibit A (the "Construction Start Deadline"), Franchisee will have (a) obtained written long term and construction financing commitments; (b) entered into a construction contract; (c) obtained zoning clearances, ingress and egress permits, and building permits in accordance with the approved Plans; (d) excavated for foundations or under slab utilities and poured the foundation; and (e) obtained Franchisor's consent to a Management Company as required under Section 8.1.A. Within 10 days after the date Franchisee has commenced construction, Franchisee will notify Franchisor that it has satisfied the above conditions. If requested, Franchisee will deliver evidence that such conditions have been met.
- B. Opening Deadline. Franchisee will complete construction and furnish the Hotel in accordance with the approved Plans, the Standards and the Marriott Agreements so that the Opening Date occurs by the date stated in Item 14 of Exhibit A (the "Opening Deadline").
C. Extensions.
- (i) Time is of the essence, but the Construction Start Deadline will be automatically extended by 30 days on a rolling basis, unless Franchisor provides at least 60 days' notice to Franchisee that such deadline will no longer be automatically extended. Any such automatic extension of the Construction Start Deadline will extend the Opening Deadline by the same amount of time;
Source: Item 16 — FINANCING OF THE HOTEL (FDD pages 206–257)
What This Means (2025 FDD)
According to the 2025 Springhill Suites By Marriott Franchise Disclosure Document, Exhibit C is applicable in two distinct scenarios: new hotel developments and changes of ownership. For new hotel developments, Exhibit C outlines the terms and conditions related to the construction of a newly developed Springhill Suites By Marriott hotel at the approved location, referencing Section 4.4 of the franchise agreement. This includes meeting construction start deadlines, securing financing, obtaining necessary permits, and adhering to approved plans and brand standards to meet the opening deadline.
In the case of a change of ownership, Exhibit C modifies the franchise agreement to ensure the hotel continues to operate as a Springhill Suites By Marriott System Hotel, also referencing Section 4.4. This involves renovations to meet brand standards. The exhibit removes certain clauses like "Chain Acquisition," "Construction Start Deadline," "Opening Deadline," and "Restricted Territory" from Exhibit B, which are not relevant in a change of ownership scenario. Instead, it focuses on relicensing and property improvement plans.
Prospective franchisees should carefully review Exhibit C to understand their obligations, whether they are developing a new hotel or taking over an existing one. For new developments, franchisees must be prepared to meet strict construction timelines and financial requirements. For changes of ownership, franchisees need to be ready to undertake renovations as outlined in the Property Improvement Plan (PIP) to align the hotel with current brand standards. Understanding these requirements is crucial for the successful operation of a Springhill Suites By Marriott franchise.