Can Embassy Suites affiliates operate a competitive brand within my Restricted Area?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
litical subdivisions, references to streets or highways, or references to an area encompassed within a radius of specified distance from the front door of the hotel.
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- Restricted Area Provision. The Restricted Area Provision will typically restrict us and our affiliates from operating, or authorizing someone else to operate, another Brand hotel during the Restrictive Period and within the Restricted Area (except as described in Paragraph 3 below). In the Restricted Area Provision, the term 'Brand' means the name used to identify the chain of hotels operated under the same Chain Code and Standards. It excludes any other brands or product lines containing "Embassy" in the name. It also excludes Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word "Hilton" as part of their brand name (such as "Hilton Garden Inn," "DoubleTree by Hilton" or "Homewood Suites by Hilton").
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- Exclusions from the Restricted Area Provision: The Restricted Area Provision will generally not apply to: (a) any hotel or motel that is currently open or under construction or has been approved for development or opening as a Brand hotel as of the Effective Date, or any hotel located or to be located within the Restricted Area that replaces such hotel under the Brand; (b) hotels or motels under brands other than the Brand; (c) hotels or motels that will not begin operating under the Brand until after the expiration of the Restrictive Period; (d) gaming-oriented hotels or facilities using the Brand; (e) shared ownership properties (commonly known as "vacation ownership" or "time share ownership" or similar real estate properties) under the Brand; and (f) any hotels, motels, or inns that are part of a chain or group of four (4) or more hotels, motels, or inns that we or our Affiliates, as a result of a single transaction or group of related transactions, own, operate, acquire, lease, manage, franchise, license, or join through a merger, acquisition or marketing agreement (or otherwise), whether under their existing name or the Brand name or any other name.
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- Restrictive Period. The Restrictive Period will normally be for an agreed-on time period. Generally, this period will be shorter than the term of the Franchise Agreement, usually
tied to a specified number of years from the date your Franchise Application was approved. In some cases, the Restrictive Period may reduce in geographic scope after an agreed-on time period. The continuation of the Restrictive Period will not depend on your achieving any particular sales volume or market penetration. An increase in population in the Restricted Area will not affect it and there are no other circumstances when your Restricted Area may be altered. Historically, we have extended the Restrictive Period for the full term of the Franchise Agreement; however, we do not intend to do so in the future. Those restrictions as to entities other than us may lapse if the Brand is no longer affiliated with Hilton Worldwide.
IMPORTANT NOTES: A Restricted Area Provision will not give you protection from previously existing hotels which are managed or licensed by us or an affiliate or our or their predecessors, or any hotel site for which we or an affiliate or its predecessor have approved an application and/or signed a franchise agreement, management agreement, lease or license agreement for a System Hotel to be developed. In addition, a Restricted Area Provision will not give you protection from any replacement hotel that replaces or will replace another such existing hotel or hotel site. SOME STATE AND/OR OTHER LAWS PROVIDE THAT TERRITORIAL AND/OR AREA RESTRICTIONS ARE VOID, VOIDABLE AND/OR SUPERSEDED BY LAW.
There may currently be franchised or company-owned Network Hotels situated in or near your area. We, Hilton Worldwide, and our affiliates or subsidiaries may establish new franchised, company-owned, or company-managed Network Hotels in or near your area.
You may compete with any Network Hotels in and near your area. There is no mechanism for resolving any conflicts that may arise between your Hotel and Network Hotels. Any resolution of conflicts regarding location, customers, support or services will be entirely within the business judgment of Hilton Worldwide and us.
We may enter into certain types of distribution, marketing, and/or loyalty relationships ("Strategic Partnerships") with third-party companies or vendors ("Strategic Partners") under which guests can make reservations and purchases through our Reservation Service and distribution system, and Hilton Honors members may receive benefits at such businesses. These Strategic Partnerships are "Other Businesses" under the Franchise Agreement. Strategic Partners are not Hilton Worldwide Brands. Strategic Partners are not our corporate affiliates, and do not offer franchises or management agreements for any of the Hilton Worldwide Brands. We may enter into, terminate, or modify any Strategic Partnership anywhere, at any time, in our discretion. Strategic Partners' businesses may be located in and near your area, including within your Restricted Area (if any).
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, if a franchisee is granted a Restricted Area Provision, Embassy Suites and its affiliates are generally restricted from operating or authorizing someone else to operate another 'Brand' hotel within that area during the Restrictive Period. However, the term 'Brand' specifically refers to hotels operated under the same Chain Code and Standards and excludes other brands or product lines containing 'Embassy' in the name. It also excludes Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word 'Hilton' as part of their brand name, such as 'Hilton Garden Inn,' 'DoubleTree by Hilton' or 'Homewood Suites by Hilton'.
Several exclusions apply to the Restricted Area Provision. These exclusions include hotels or motels under brands other than the Embassy Suites brand, hotels that will not begin operating under the Embassy Suites brand until after the expiration of the Restrictive Period, gaming-oriented hotels using the Embassy Suites brand, shared ownership properties under the Embassy Suites brand, and chains or groups of four or more hotels that Embassy Suites or its affiliates acquire or join through a transaction. Furthermore, the Restricted Area Provision does not protect against previously existing hotels managed or licensed by Embassy Suites or its affiliates, or any hotel site for which an application has been approved.
Embassy Suites and its affiliates engage in a wide range of business activities in lodging, hospitality, and related services, which may be competitive with a franchisee's hotel. They may own, operate, manage, franchise, license, lease, affiliate, or associate with competitive guest lodging businesses under any brands or marks, provided that the franchisee's Restricted Area protections, if any, are observed. Additionally, Embassy Suites and its affiliates may furnish services, products, advice, and support to competitive guest lodging businesses located within the Restricted Area.
Prospective franchisees should be aware that the standard Franchise Agreement does not grant a protected area or territory, and they may face competition from other franchisees, hotels owned by affiliates, or other competitive brands controlled by Embassy Suites. The company retains the right to engage in other business activities, even if they compete with the franchisee's hotel, and franchisees have no rights to claim damages or other relief arising from these activities.