What does 'Other Businesses' mean in the context of the Embassy Suites Franchise Agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
receive an exclusive territory. You may face competition from other franchisees, from hotels that our affiliates own, or from other channels of distribution or competitive brands that we control. The standard Franchise Agreement permits us to own, operate, manage, franchise, license, lease, or affiliate or associate with any Other Business of any nature, whether in the lodging or hospitality industry or not, and whether under the Brand, a competitive brand, or otherwise, at any time and in any location. We and our affiliates have the right to engage in any Other Businesses, even if they compete with your Hotel, the Brand, System Hotels, or Network Hotels, and whether we or our affiliates start those businesses, or purchase, merge with, acquire, are acquired by, come under common ownership with, affiliate or associate with, such Other Businesses.
We may also: (a) modify the System by adding, altering, or deleting elements of the System; (b) use or license to others all or part of the System; (c) use the facilities, programs, services and/or personnel used in connection with the System in Other Businesses; and (d) use the System, the Brand, and the Marks in the Other Businesses. You acknowledge and agree that you have no
rights to, and will not make any claims or demands for, damages or other relief arising from or related to any of the foregoing activities, and you acknowledge and agree that such activities will not give rise to any liability on our part, including, but not limited to, liability for claims for unfair competition, breach of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty. "Other Businesses" means any business activity we or our affiliates engage in, other than the licensing of your Hotel.
We may, however, agree to give franchisees certain specific territorial restrictions ("Restricted Area Provision") for an area surrounding the franchised hotel and encompassing the immediate competitive market for the hotel as may be agreed on by the parties ("Restricted Area"). If we agree to give you a Restricted Area Provision for your New Development or Conversion, it will normally be for an agreed-on time period, which is shorter than the term of the Franchise Agreement ("Restrictive Period"). We will not normally grant a Restricted Area Provision for a Change of Ownership or Re-licensing, although we will 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.
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, "Other Businesses" refers to any business activity that Embassy Suites or its affiliates engage in, excluding the licensing of the franchisee's hotel. This broad definition allows Embassy Suites and its affiliates to participate in various ventures, whether related to lodging or entirely different, without restriction.
This definition has significant implications for prospective Embassy Suites franchisees. The document states that Embassy Suites can "own, operate, manage, franchise, license, lease, or affiliate or associate with any Other Business of any nature, whether in the lodging or hospitality industry or not, and whether under the Brand, a competitive brand, or otherwise, at any time and in any location." This means that Embassy Suites could potentially operate businesses that directly compete with a franchisee's hotel, even under a different brand, without violating the franchise agreement.
Furthermore, Embassy Suites reserves the right to modify the System, use or license parts of it to others, and utilize the System's resources in these "Other Businesses." The franchisee explicitly acknowledges that they have no rights to claim damages or relief from these activities, even if they result in unfair competition or divided loyalty. This highlights the non-exclusive nature of the franchise license and the extensive rights retained by Embassy Suites and its affiliates to engage in diverse business activities, which may or may not benefit the individual franchisee.
Embassy Suites may also form Strategic Partnerships with third-party companies, allowing guests to make reservations and Hilton Honors members to receive benefits at these businesses. These Strategic Partners are considered "Other Businesses" and are not Hilton Worldwide Brands or corporate affiliates. These partnerships can be established, terminated, or modified at Embassy Suites's discretion, and these businesses may be located near a franchisee's hotel, potentially increasing competition. Therefore, franchisees need to be aware that Embassy Suites retains considerable freedom to diversify its business interests, which could impact their individual hotel's performance.