Is a transfer of equity interest by a Surestay Hotel By Best Western franchisee prohibited?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
or other obligations under this Agreement.
- 13.2 Your Transfer. You understand and acknowledge that the rights and duties in this Agreement are personal to you and that we are entering into this Agreement in reliance on your business skill, financial capacity, and the personal character of you, your officers, directors, partners, members, shareholders or trustees. A Transfer by you of any Equity Interest, or this Agreement, or any of your rights or obligations under this Agreement, or a Transfer by an Equity Owner is prohibited other than as expressly permitted herein.
- 13.2.1 Permitted Transfers That Require Notice. The following Transfers are permitted with prior written notice to us if the Permitted Transfer does not result in a change in Control of the Franchisee, the Hotel or the Hotel Site provided that after the transaction:
- 13.2.1.1 Less than 50% of all Equity Interests in Franchisee will have changed hands since Franchisee first became a party to this Agreement,
- 13.2.1.2 Less than 80% of all Equity Interests in Franchisee will have changed hands since Franchisee first became a party to this Agreement, and no Equity Interest(s) will be held by any natural person or Entity other than those who held them when Franchisee first became a party to this Agreement, or
- 13.2.1.3 Any Publicly Traded Equity Interest may be Transferred.
- 13.2.2 Permitted Transfers That Require Notice and Consent. We will permit you or any Equity Owner named in the Addendum as of the Effective Date (or any transferee Equity Owner we subsequently approve) to engage in the Permitted Transfers set forth below if any such Permitted Transfer does not result in a change of Control of the Franchisee, the Hotel or the Hotel Site and: (a) the proposed transferee is not a Sanctioned Person or a Competitor; (b) you give us at least sixty (60) days' advance written notice of the proposed Permitted Transfer (including the identity and contact information for any proposed transferee and any other information we may require in order to review the proposed Permitted Transfer); (c) you pay to us a nonrefundable processing fee of One Thousand Dollars ($1,000) with the Permitted Transfer request; (d) you follow our then-current procedure for processing Permitted Transfers; and (e) you execute any documents required by us for processing Permitted Transfers. If a Permitted Transfer listed in Subsection 13.2.2 otherwise qualifies as a Permitted Transfer without notice or consent under Subsection 13.2.1, the provisions of Subsection 13.2.1 will control.
- 13.2.2.1 Affiliate Transfer. You or any Equity Owner may Transfer an Equity Interest or this Agreement to an Affiliate.
- 13.2.2.2 Transfers to a Family Member or Trust. If you or any Equity Owner as of the Effective Date are a natural person, you and such Equity Owner may Transfer an Equity Interest or this Agreement to an immediate family member (i.e., spouse, children, parents, siblings) or to a trust for your benefit or the benefit of the Equity Owner or the Equity Owner's immediate family members.
- 13.2.2.3 Transfer On Death. On the death of Franchisee or an Equity Owner who is a natural person, this Agreement or the Equity Interest of the deceased Equity Owner may Transfer in accordance with such person's will or, if such person dies intestate, in accordance with laws of intestacy governing the distribution of such person's estate, provided that: (i) the transfer on death is to an immediate family member or to a legal entity formed by such family member(s); and (ii) within one (1) year after the death, such family member(s) or entity meet all of our then-current requirements for an approved Transferee.
- 13.2.3 Change of Ownership Transfer. Any proposed Transfer that is not described in Subsection 13.2.1 or 13.2.2 is a Change of Ownership Transfer. We will have sixty (60) days from our receipt of the completed and signed Change of Ownership Application (described below) to consent or withhold our consent to any proposed Change of Ownership Transfer. You consent to our communication with any third party we deem necessary about the Hotel in order for us to evaluate the proposed Change of Ownership Transfer. Our consent to the Change of Ownership Transfer is subject to the following conditions, all of which must be satisfied at or before the date of closing t
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to Surestay Hotel By Best Western's 2025 Franchise Disclosure Document, a transfer of equity interest is generally prohibited but does allow for some exceptions. The FDD states that the rights and duties within the franchise agreement are personal to the franchisee, and Surestay Hotel By Best Western is entering into the agreement based on the franchisee's business skills, financial capacity, and personal character, as well as those of their officers, directors, partners, members, shareholders, or trustees.
A transfer of equity interest is allowed if it meets certain conditions. Transfers are permitted with prior written notice if the transfer does not result in a change in control of the franchisee, the hotel, or the hotel site, provided that less than 50% of all equity interests in the franchisee have changed hands since the franchisee first became a party to the agreement. Alternatively, a transfer is permitted if less than 80% of all equity interests have changed hands since the franchisee became a party, and no equity interests are held by anyone other than those who held them initially. Any publicly traded equity interest may also be transferred.
Other permitted transfers require both notice and consent from Surestay Hotel By Best Western. These include transfers to an affiliate, transfers to a family member or trust, and transfers upon death. For these transfers, the proposed transferee must not be a Sanctioned Person or a Competitor, and Surestay Hotel By Best Western requires at least sixty (60) days' advance written notice, a nonrefundable processing fee of One Thousand Dollars ($1,000), adherence to their transfer procedures, and execution of required documents. Any transfer that does not fall under the permitted categories is considered a Change of Ownership Transfer, requiring Surestay Hotel By Best Western's consent, which may be withheld. Surestay Hotel By Best Western has sixty (60) days to approve or deny the transfer after receiving a completed application.