What is the condition regarding the Lender's ownership structure that must be met for the Assumption of an Embassy Suites franchise?

According to Embassy Suites' 2025 Franchise Disclosure Document, a key condition regarding the Lender's ownership structure for the assumption of a franchise is that the entity exercising rights as a Lender cannot own a direct or indirect beneficial interest in the Franchisee, except for a strictly passive interest through the Loan. This stipulation is designed to maintain a clear separation between the lender's role and the franchisee's operational control, ensuring the integrity of the franchise agreement.

This condition is put in place to prevent conflicts of interest and to ensure that the Lender does not exert undue influence over the operations of the Embassy Suites franchise. By maintaining a passive role, the Lender's involvement is limited to financial oversight, without interfering in the day-to-day management and strategic decisions of the franchisee. This separation helps to protect the brand standards and operational consistency that are crucial for the success of the Embassy Suites franchise system.

For a prospective Embassy Suites franchisee, this means that if their financing involves a Lender, it is important to verify that the Lender's ownership structure complies with this requirement. Failure to do so could jeopardize the assumption of the franchise agreement. Franchisees should discuss this condition with their legal and financial advisors to ensure full compliance and to avoid any potential issues during the assumption process. This also ensures that the relationship between the franchisee and the lender remains transparent and aligned with the franchisor's expectations.