What is a 'Controlling Affiliate' in the context of a Surestay Hotel By Best Western franchise?

According to the 2025 Surestay Hotel By Best Western Franchise Disclosure Document, an 'Affiliate' is defined as any individual, firm, corporation, partnership, limited liability company, association, trust, or other entity that directly or indirectly controls, is controlled by, or is under common control with the subject entity. This definition is important for prospective franchisees to understand because it clarifies the scope of relationships that Surestay Hotel By Best Western considers relevant to the franchise agreement.

This definition has implications for various aspects of the franchise agreement, including transfer of ownership, competitive restrictions, and financial reporting. For example, if a franchisee intends to transfer ownership to an entity that is considered an affiliate, this transfer may be subject to specific conditions or require approval from Surestay Hotel By Best Western. Similarly, if an affiliate of the franchisee is involved in a competing brand, it could potentially violate the terms of the franchise agreement.

Understanding the concept of 'control' is crucial. While the FDD defines 'Affiliate' based on control, it does not specifically define what constitutes 'control'. Typically, 'control' refers to the power to direct the management and policies of an entity, usually through voting rights or contractual arrangements. A prospective Surestay Hotel By Best Western franchisee should seek clarification from the franchisor regarding the specific criteria used to determine 'control' in the context of the franchise agreement to avoid potential disputes or misunderstandings in the future.