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Related Party Transactions
12 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions
Transactions with Company's Largest Shareholder
Effective October 15, 1997, Choice Hotels International, Inc., which included both a franchising business and owned hotel business, separated the businesses via a spin-off into two companies: Sunburst Hospitality Corporation (referred to hereafter as “Sunburst”) and the Company. Subsequent to the spin-off, the Company’s largest shareholder retained significant ownership percentages in both Sunburst and the Company. As part of the spin-off, Sunburst and the Company entered into a strategic alliance agreement. Among other things, the strategic alliance agreement, as amended, provided for the determination of liquidated damages related to the termination of Choice branded Sunburst properties. The liquidated damage provisions extend through the life of the existing Sunburst franchise agreements. As of December 31, 2016, Sunburst operates 7 hotels under franchise with the Company.
Total franchise fees, including royalty, marketing and reservation system fees, paid by Sunburst to the Company, included in the accompanying consolidated financial statements were $2.0 million, $2.5 million and $2.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016 and 2015, accounts receivable included $0.2 million and $0.2 million, respectively, due from Sunburst.
The Company and family members of the Company's largest shareholder entered into an agreement that allows those family members to sub-lease aircraft from the Company from time to time for their personal use. The agreements provide for lease payments that contribute towards the fixed costs associated with the aircraft as well as reimbursement of the Company’s variable costs associated with operation of the aircraft, in compliance with, and to the extent authorized by, applicable regulatory requirements. The terms of the sub-lease agreements are consistent with the terms of sub-lease agreements that the Company has entered into with unrelated third parties for use of the aircraft.  During the years ended December 31, 2016, 2015 and 2014, the Company received $38 thousand, $27 thousand, and $95 thousand respectively, pursuant to this arrangement.
The Company maintained a lease agreement on behalf of a family member of the Company’s largest shareholder for 2,154 square feet of office space located in Chevy Chase, Maryland. Annual rent payments under the lease totaled approximately $84 thousand. The lease was terminated as of September 30, 2014, and a $103 thousand termination payment was made to the landlord in connection with the early termination. The Company provided the use of the entire leased space free of charge and reimbursed the family member for the taxes incurred related to the personal use of the office space. During the year ended December 2014, the Company incurred $27 thousand pursuant to this arrangement.
In December 2013, the Company's board of directors approved an arrangement with an entity controlled by the family members of the Company's largest shareholder to sublease approximately 2,200 square feet of office space located in Chevy Chase, Maryland. The lease has a month to month term, with a 90 day notice period, and annual lease payments totaling approximately $90 thousand. In May 2016, the sublease was amended for the expansion of the office space, with annual lease payments totaling approximately $150 thousand. During the years ended December 31, 2016 and 2015, the Company received approximately $179 thousand and $90 thousand, respectively, in rent payments associated with this lease.
Transactions with Company Management
In February 2015, the Company entered into an agreement with the Company's Chief Executive Officer ("CEO") that allows for the sub-lease of aircraft from time to time for personal use. The terms of the sub-lease are consistent with the terms of sub-lease agreements that the Company has entered into with unrelated third parties for use of the aircraft. During the year ended December 31, 2015, the Company received $12 thousand pursuant to this agreement. No amounts have been received or remain outstanding for the year ended December 31, 2016.
Foreign Subsidiary Credit Agreement
In August 2016, the Company entered into a credit agreement with a related party to a foreign subsidiary. Borrowings under the agreement carry an interest rate of 4.0% per year. As of December 31, 2016, the Company has $0.6 million outstanding under this agreement, which is reflected within the current portion of long term debt on the balance sheet.