Glossary

Comfort Letter (Franchisor)

Also known as: Franchisor Estoppel Letter

A document from a hotel franchisor to a lender confirming the status and key terms of the franchise agreement — that it is in good standing, its remaining term, and any known defaults — typically delivered as a closing condition on a hotel loan.

A comfort letter is narrower than a full recognition agreement: it primarily gives the lender factual, estoppel-style assurance about the franchise relationship rather than affirmative lender step-in or cure rights, and is commonly required both at origination and at any subsequent refinancing or loan assumption so the lender can confirm the agreement it underwrote has not been amended, defaulted, or terminated since closing. Many hotel lenders require both a comfort letter as a baseline diligence item and a separate, more robust recognition or non-disturbance agreement that does confer lender rights as a condition to closing, and a franchisor's refusal to issue either is treated as a significant red flag about the underlying health of the franchise relationship.