In one sentence
An agreement from a hotel franchisor to the lender, providing notice and cure rights and continuity of the flag on default.
The longer version
The comfort letter gives a hotel lender assurance the brand will not simply vanish on a borrower default, offering notice, cure rights, and a path to keep the flag. It is central to financing branded hotels.
Negotiating the comfort letter with the franchisor is a hospitality-specific closing workstream.
Common questions
- What is a franchisor comfort letter?
- An agreement from a hotel franchisor to the lender providing notice of franchisee defaults, an opportunity to cure, and continuity of the brand if the lender takes over.
- Why is a comfort letter important?
- Because the franchise is central to a hotel's value. The comfort letter protects the lender from losing the flag without warning.
- Who negotiates the comfort letter?
- The lender's counsel, usually on the franchisor's standard form, with limited changes available.
Keep reading
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The commercial loan closing processThe five stages from term sheet to funded.
- Commercial loan softwareWhere this sits in the lending stack.