Before you sign: What it costs to leave a soft brand

In two of the largest chains' 2026 agreements, an owner cannot end the contract early, even if the brand underdelivers. Leaving costs up to five years of fees, and the guest records stay with the chain.

by Markus Busch

A soft brand agreement is a long commitment. In Hilton's 2026 disclosure for Curio Collection, a hotel converting to the brand signs for 10 to 20 years from the day it opens under the flag. Marriott's 2026 disclosure for Autograph Collection says the term for an existing hotel is typically less than 20 years, depending on the hotel's condition and the work the chain requires.

A lot changes in a decade. Owners sell, families hand a hotel on, and travelers change how they book. Both documents set out plainly what happens if the owner wants out early.

No right to end it early

Hilton's disclosure puts it in one sentence: the owner is "not authorized" to terminate the franchise agreement before the term expires. Leaving anyway, without cause, is a material breach of the agreement.

Marriott's says the same in its own way. In the table that lists who can end the contract and how, the line for termination by the franchisee reads "Not Applicable," subject to state law.

Both agreements do allow an exit in two situations the owner does not choose. If a government takes part of the property and the hotel can no longer operate to the brand's standards, the contract can end without a penalty. If fire or another disaster closes the hotel and the owner decides not to rebuild, it can end too, provided the owner does not open a competing hotel on the same site within a set period. Changing her mind is not one of the situations.

Sixty months of fees

What an owner pays when the contract ends early is set by formula. The agreements call it liquidated damages, an agreed amount in place of a court working out the chain's actual loss.

At Curio, once the hotel has been open for two years, the amount is the hotel's average monthly royalty multiplied by 60. In the first two years, it is the higher of the hotel's own average and the average across the whole brand, multiplied by 60. If fewer than 60 months remain in the term, the remaining months are used instead.

At Autograph, the amount is the hotel's average monthly fees multiplied by 60, or by the months remaining if fewer. Marriott's "fees" are wider than the royalty. They include the program services contribution, which pays for marketing, reservations and systems, averaged over the 24 months before the contract ends.

Both chains can also claim their actual losses instead in certain cases, for example when several of an owner's agreements end early within a year.

€1.3 million and €2.2 million

The formulas are easier to read with a hotel attached. Take a 100-room independent at a €200 average rate and 70% occupancy. Its room revenue is about €5.1 million a year.

Under Curio's royalty of 5% of room revenue, 60 months of royalty comes to about €1.3 million.

Under Autograph's terms, the fee base adds the program contribution: 2.02% of room revenue, plus $38,488 a year, plus $450 per room a year. Treating the dollar amounts as euros for the sketch, 60 months comes to about €2.2 million.

These are illustrations built on the published rates, not quotes. A real hotel's figure depends on its own revenue and its own contract. The order of magnitude is the point: roughly five years of what the hotel pays the chain.

No exit if the brand underdelivers

The agreements are just as clear about the case owners worry about most, a brand that sends less business than the presentation promised.

Neither template ties the owner's right to leave to the brand's results. Not occupancy, not revenue per room, not the share of bookings the chain delivers. Marriott's agreement goes further. The owner confirms she "did not rely on" any promise not written into it, and Marriott disclaims "any information, warranty or guarantee" about the hotel's revenue, profit or success. Both agreements say promises made outside the signed documents may not be enforceable. Hilton adds that this does not cancel what its disclosure says, but the disclosure itself says there is "no assurance" a hotel will reach the results it shows.

Lawyers who negotiate these contracts for owners describe the same thing. In a 2018 guide, the law firm Goodwin wrote that hotel franchise agreements almost never give the owner a right to terminate, and that liquidated damages are set "purposely high to discourage early termination."

The exit owners do use is a sale. A buyer who signs a new agreement with the chain lets the old one end without liquidated damages, Goodwin notes.

The guest records stay with the chain

The money is one part. The other is what the hotel takes with it when it goes.

Hilton's agreement says all information it obtains from the hotel or about its guests, including through the reservation, revenue and property systems it provides, is Hilton's property. The hotel may not use it after the term. Even guest data the hotel gathered from third parties is excluded if it came through a reservation or through the loyalty program.

Marriott's disclosure says it owns the data the hotel keeps in its systems, "including information about guests, reservations, our loyalty programs." Customer lists are Marriott's confidential information. When the contract ends, the hotel must hand over all customer information and tell its customers that it has left the brand.

Loyalty members fill most of the rooms at these hotels, as the previous piece in this series showed. Their records stay behind.

At the end of the term, the chain decides

Reaching the end of the contract does not guarantee the next one. Hilton's disclosure says the owner has no right to renew or extend. If Hilton agrees to a new license, it may come on "materially different terms," with conditions for upgrading the hotel. Marriott's says the agreement is not renewable, and that the owner should not expect any right to keep operating under the brand after the term.

So the decision to stay is the chain's, and the decision to leave early is expensive. The owner's real moment of choice comes once, before signing.

What the documents do not settle

These are US disclosure documents and template agreements. Several US states limit liquidated damages clauses, and California is among them. European contracts are not published, and the chains may write them differently. Individual terms can also differ from the template.

They can, because they get negotiated. Marriott's agreement lists "the negotiated terms" of each contract among the information an owner must keep confidential.

Read also: Before you sign: What a soft brand actually sends your hotel

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