ABSTRACT
The Subordination, Non-Disturbance and Adornment Agreement (SNDA) are a familiar document in the hotel financing arena. Owner joins in the SNDA as a joiner party to memorialize owners consent to the terms and conditions agreed to by manager and mortgagee. Manager and mortgagee are the two parties with the most at stake after owner has defaulted on its loan. In the franchise context, the relationship among franchisor, franchisee and franchisee's mortgagee is memorialized in the comfort letter. Franchisor has its own form of comfort letter; the comfort letter begins with a statement that franchisee and mortgagee have request franchisor to enter into the comfort letter. Both the collateral assignment of the management agreement and the SNDA are immediately effective upon the loan closing. Many franchisors maintain and make available to mortgagees a list of approved management companies. Consistent with the personal nature of the franchise agreement, comfort letters are assignable in only limited situations.
