For The Standardx franchise, does the definition of 'Comfort Letter Party' include each Lender?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
"Lender" means each financial institution or other party (including an Affiliate of Franchisee), if any, that provided or provides any financing for Franchisee's acquisition, development, and/or operation of the Hotel, including any mortgagee or trustee under any deed of trust and any mezzanine lender or other party that takes a pledge of Franchisee's or any Controlling Owner's ownership interests as security for the repayment of any such financing.
- 2.7 Comfort Letter Parties. Franchisee must cause each Comfort Letter Party to sign a comfort letter or other agreement that Hyatt reasonably specifies under which such Comfort Letter Party agrees, among other things, to assume Franchisee's obligations under this Agreement (subject to Hyatt's rights under ARTICLE XII) if the Comfort Letter Party or any of its Affiliates acquires title or otherwise assumes possession, or the right to sell or direct the disposition of, the Hotel's real property or building and improvements. Franchisee shall pay Hyatt its then current comfort letter fee for each comfort letter that Hyatt negotiates relating to the Hotel.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, a 'Lender' is defined as each financial institution or other party that provides financing for the franchisee's acquisition, development, and/or operation of the hotel. This includes any mortgagee or trustee under any deed of trust and any mezzanine lender or other party that takes a pledge of the franchisee's or any controlling owner's ownership interests as security for the repayment of any such financing.
The FDD also states that the franchisee must ensure each Comfort Letter Party signs a comfort letter or other agreement that The Standardx reasonably specifies. This agreement requires the Comfort Letter Party to assume the franchisee's obligations under the agreement if the Comfort Letter Party or any of its affiliates acquires title or otherwise assumes possession, or the right to sell or direct the disposition of, the Hotel's real property or building and improvements. The franchisee is also responsible for paying The Standardx's current comfort letter fee for each comfort letter that The Standardx negotiates relating to the Hotel.
Therefore, while the FDD defines 'Lender' and discusses 'Comfort Letter Parties,' it does not explicitly state that the definition of 'Comfort Letter Party' includes each 'Lender.' A prospective franchisee should seek clarification from The Standardx regarding whether all lenders are considered Comfort Letter Parties and what specific obligations and fees are associated with comfort letters for these parties.