How are the boundaries of the Restricted Area for an Embassy Suites franchise typically determined?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
l occasionally do so under certain unique circumstances. The following discussion applies where we agree to give you a Restricted Area Provision in your Franchise Agreement:
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- Restricted Area. The boundaries of the Restricted Area will normally depend on the relevant market in the immediate area and competitive circumstances in the relevant market at the time you sign the Franchise Agreement. The boundaries will vary in size and shape from hotel to hotel. Boundaries will not be delineated according to any standard formula, but may be delineated in various ways, including references to cities, metropolitan areas, counties or other political 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.
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the boundaries of a Restricted Area, if granted, are determined by the immediate market and competitive circumstances at the time the Franchise Agreement is signed. These boundaries are not based on a standard formula and will vary in size and shape from hotel to hotel.
Specifically, the boundaries may be delineated using references to cities, metropolitan areas, counties, political subdivisions, streets, highways, or a specified radius from the hotel's front door. The Restricted Area Provision typically restricts Embassy Suites and its affiliates from operating or authorizing another party to operate another 'Brand' hotel within the Restricted Area during the Restrictive Period. The term 'Brand' refers to the chain of hotels operated under the same Chain Code and Standards, excluding other brands or product lines containing "Embassy" in the name, as well as Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word "Hilton" as part of their brand name.
It's important to note that a Restricted Area Provision does not protect franchisees from previously existing hotels managed or licensed by Embassy Suites or its affiliates, or any hotel site for which an application has been approved. Additionally, the provision does not protect against any replacement hotel that replaces an existing hotel or hotel site. The Restrictive Period is generally shorter than the full term of the Franchise Agreement and is usually tied to a specified number of years from the date the Franchise Application was approved.
Prospective franchisees should be aware that Embassy Suites, Hilton Worldwide, and their affiliates may establish new franchised, company-owned, or company-managed Network Hotels in or near the franchisee's area. Franchisees may compete with any Network Hotels in and near their area, and there is no mechanism for resolving conflicts that may arise between the franchisee's 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 Embassy Suites.