What constitutes a 'Change of Ownership Transfer' for an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2.2 Change of Ownership Transfer. A Change of Ownership Transfer is any Transfer that will result in a change of Control of you, the Hotel or the Hotel Site, or is not otherwise described in Subsection 12.2.1. We will have sixty (60) days from our receipt of the completed and signed franchise application to consent or withhold our consent to any proposed Change of Ownership Transfer. Our consent will not be unreasonably withheld. You consent to our communication with any third party we deem necessary about the Hotel in order for us to evaluate the proposed Change of Ownership Transfer. Our consent to the Change of Ownership Transfer is subject to the following conditions, all of which must be satisfied at or before the date of closing the Change of Ownership Transfer ("Closing"):
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a 'Change of Ownership Transfer' refers to any transfer that results in a change of control of the franchisee, the hotel, or the hotel site. This definition excludes transfers specifically described in Subsection 12.2.1, which covers transfers to affiliates, family members, or in the event of death. Essentially, if a transfer leads to a new controlling entity for the franchise, hotel, or site, and it doesn't fall under the exceptions for affiliates or family, it's considered a Change of Ownership Transfer. Embassy Suites has 60 days to approve or deny the transfer request.
For a prospective Embassy Suites franchisee, understanding this definition is crucial because it dictates the process and requirements for selling or transferring the franchise to a new owner. If a franchisee plans to sell the business, they need to be aware that Embassy Suites has the right to evaluate and approve the potential new owner. This process includes assessing the transferee's business qualifications and ensuring they meet the brand's standards for new franchisees. The franchisor also communicates with third parties to evaluate the transfer.
The FDD specifies that Embassy Suites's consent to a Change of Ownership Transfer is subject to certain conditions that must be met before the transfer can be finalized. These conditions include the transferee submitting a completed application, paying the franchise application fee, and executing the current franchise agreement. The franchisee must not be in default of any agreements with Embassy Suites, and all outstanding amounts must be paid up to the closing date. Furthermore, any legal issues must be resolved, and the transferee must meet the current business requirements for new franchisees. The transferee must also agree to indemnify Embassy Suites against any liabilities arising from the franchisee's prior operations.
In summary, a Change of Ownership Transfer for an Embassy Suites franchise is a significant event that requires franchisor approval and adherence to specific conditions. Franchisees need to be aware of these requirements to ensure a smooth transfer process and avoid potential complications. This also ensures that the brand maintains its standards and protects its interests when ownership changes.