Hotel Franchise Agreements and Comfort Letters: Legal Challenges for Real Estate Lenders
Negotiating Comfort Letters; Responding to Provisions in Franchise Agreements That Impact Hotel Loans
Recording of a 90-minute CLE webinar with Q&A
Conducted on Wednesday, March 8, 2017
Recorded event now available
This CLE webinar will enable lender’s counsel to review and negotiate hotel franchise comfort letters. The panel will also review standard features of hotel franchise agreements and the provisions of most concern to lenders. Finally, the panel will discuss how early termination, PIP and other franchise conditions can be addressed in the loan documents.
The franchise comfort letter is of critical importance to real estate lenders when financing hotel properties. The lender must have assurances from the franchisor that it will be permitted to assume the franchise agreement (at its option) in the event the lender forecloses on the property, and continue with the hotel brand with access to the reservation and other services afforded the franchisee.
The comfort letter also addresses related concerns such as subordination of the franchise agreement to the loan, notice and cure rights with respect to franchisee defaults, and ability to assign the agreement to an assignee of the loan or to a subsequent property owner after foreclosure.
Prior to review and negotiation of the comfort letter, counsel must confirm that the franchise agreement would otherwise be acceptable to the lender as a successor franchisee. Lender’s counsel must be able to evaluate the key provisions in the franchise agreement from the perspective of a franchisee, with particular focus on the remaining term of the agreement, termination and liquidated damages provisions, purchase options and ROFRs, property improvement obligations, and property management and area of protection provisions.
Listen as our authoritative panel discusses why certain provisions in franchise agreements are particularly important to lenders, and how PIP and other conditions might be reflected in reserves and other structural features of the loan. The panel will also take an in-depth look at the provisions that should be included in all comfort letters, which provisions are most critical to every lender, and additional provisions required by conduit lenders to address CMBS loan assignments.
- Comfort letters—key provisions
- Notice and cure—monetary and non-monetary
- Acquisition and assumption by lender—option to terminate
- Subsequent sale/assignment by lender after foreclosure
- Subordination of franchise agreement
- Consent to collateral assignment
- Assignment of loan by lender—portfolio and CMBS lenders
- Franchise agreement—key provisions
- Fees, fee reductions
- Remaining term/ termination and liquidated damages provisions
- Right of first offer and right of first refusal
- Property management rights
- Area of protection
- Guaranty—ability to assign
- Property improvement plan
- Loan documents revisions to address PIP, termination and other franchise issues
The panel will review these and other key issues:
- What are the critical elements of the franchise comfort letter in hotel finance?
- What lender protection provisions should be included in the comfort letter?
- Which provisions in the franchise agreement are most important to the lender?
- What provisions should be included in loan documents to address early termination, PIP and other issues?
Tara K. Gorman, Partner
Ms. Gorman represents sellers, owners and licensors in the acquisition, disposition, finance, development, management and leasing of major hospitality, resort and commercial properties. Her property deal portfolio includes domestic and international hotels, office buildings, condo-hotels, water parks, casinos, restaurants and retail stores. Additional areas of practice depth include telecommunications and finance. She counsels clients on management and licensing and branding agreements, website service, telecom licensing and lease agreements. She frequently speaks and writes on emerging real estate issues, including on brand standards in hotel management agreements and best practices in hotel sale negotiations.
Guy Maisnik, Partner
Jeffer Mangels Butler & Mitchell,
Mr. Maisnik has nearly three decades of commercial real estate finance with a strong expertise in hotels. He is Vice-Chair of the firm’s Global Hospitality Group and advises clients on hospitality transactions; representing lenders, opportunity funds, banks, special servicers, owners, REITs and developers in hotel transactions.
Jonathan Falik, Founder and CEO
JF Capital Advisors,
Mr. Falik leads the firm's hospitality business, which includes equity and debt placement, asset acquisitions and dispositions, portfolio transactions, JV structuring, asset management, management company and brand evaluation, and strategic and capital markets advisory services. Previously, he was a Senior Managing Director and the Head of Hospitality Capital Markets at BGC Real Estate Capital Markets. Simultaneously, he was the Head of Hotel Investment Sales for Newmark Grubb Knight Frank. Prior to that, he was a Managing Director and Head of the Lodging and Leisure Investment Banking group at Cantor Fitzgerald & Co. Prior to joining Cantor Fitzgerald, he was the founder and CEO of JF Capital Advisors, a lodging advisory and principal investment firm.
CLE On-Demand - Streaming Video
Includes recorded streaming video of full program plus PDF handouts.
On-demand is the only recorded format recognized for CLE credits in DE, IN, KS, LA, MS, NC, OH, OK, SC, TN, VA, WI.
AK, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN*, KS, KY, LA, ME, MN, MO, MT, NC, ND, NH**, NJ, NM, NV, NY, OH*, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.
**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.
CLE On-Demand Video $297.00
Includes full event recording plus handouts.
Strafford is an approved provider and self-study CLE credit is available in most states.
AK, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NJ, NM, NY, OR, PA, TN, TX, UT, VT, WA, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
Strafford will process CLE credit for one person on each recording.
Additional copies of a recording can be purchased at a discount. Please call Strafford Customer Service toll-free at 1-800-926-7926 ext 10 or email email@example.com to place your order.
Recorded Webinar Download $297.00
Recorded Audio Download (MP3) $297.00
DVD (Slide Presentation with Audio) $297.00 plus $9.45 S&H
Strafford webinars offer several options for participation: online viewing of speaker-controlled PowerPoint presentations with audio via computer speakers or via phone; or audio only via telephone (download speaker handouts prior to the program). Please note that our webinars do not feature videos of the presenters.
CLE Credits By State
The order of the presentation was good and helpful and discussion of key concepts was excellent.
The topic was timely and relevant.
Maynard Cooper & Gale
Clearly had right speakers for this seminar.
Holland & Knight
Webinar contained lots of new information and real life examples.
I appreciated that there was a great deal of current case law on the subject and the speakers were concise and informative.
Thomas G. Mancuso
Real Estate Law Advisory Board
Stroock & Stroock & Lavan
Robinson & Cole
Jenner & Block
Kilpatrick Townsend & Stockton
Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.