Is Embassy Suites allowed to transfer its contractual obligations to the franchisee to another party?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Lender's Sale to Third Party After Assumption. The transfer provisions of the Franchise Agreement will apply to any sale, assignment or transfer by Lender after an Assumption. If the transfer is to a third party who desires to continue to operate the Hotel, these provisions require a change of ownership application, approval of the third party and payment of an application fee.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, the transfer provisions of the Franchise Agreement apply to any sale, assignment, or transfer by a Lender after an Assumption. If the transfer is to a third party who desires to continue to operate the Hotel, these provisions require a change of ownership application, approval of the third party, and payment of an application fee. This means that Embassy Suites can enforce the transfer provisions outlined in the franchise agreement if a lender who has assumed the franchisee's obligations sells, assigns, or transfers the agreement to another party.
Specifically, if a lender assumes the rights and obligations of the franchisee due to an acquisition, the lender is obligated to perform all of the franchisee's obligations under the Franchise Agreement. This includes the payment of fees owed to Embassy Suites. The lender must also cure all defaults within a timeframe determined by Embassy Suites, based on the nature of the default and the condition of the hotel.
Furthermore, the lender is required to provide all necessary information for Embassy Suites to determine that the lender is not a Sanctioned Person and deliver any other documents regarding the lender's ownership structure that Embassy Suites reasonably requests. An amendment to the Franchise Agreement will be prepared to document the Assumption, and the lender must execute and return the Amendment within ten business days after receipt from Embassy Suites. Failure to do so constitutes a default under the Franchise Agreement, entitling Embassy Suites to terminate the Franchise Agreement.
In the event of a transfer to a third party who wishes to continue operating the hotel, the third party must apply for a change of ownership, be approved by Embassy Suites, and pay an application fee. This ensures that Embassy Suites maintains control over who operates a franchised location and that the new operator meets their standards.