Glossary

Change-of-Control Provision (Franchise/Management Agreement)

Also known as: Change of Control Clause

A clause giving the franchisor or manager consent, approval, or termination rights when the hotel is sold, refinanced, or otherwise experiences a change in ownership or control, protecting the brand's or operator's ability to vet a new counterparty.

Because franchise and management agreements are personal-service, brand-reputational contracts, most are not freely assignable, and a sale of the hotel — or in some agreements even a refinancing that changes the controlling equity holder — triggers a franchisor or manager consent right, sometimes a right of first offer, and often a re-underwriting of the new owner's financial capacity before the agreement is permitted to continue. This provision materially affects deal timing: a buyer or new lender must confirm early in diligence whether the existing flag or manager will consent to remain in place, since a forced re-flagging or manager termination triggered by a change of control can require an unplanned property improvement plan, disrupt loyalty-driven demand, and in some cases trigger liquidated damages if the change of control is treated as an early termination event.