What constitutes an 'Equity Owner' in the context of an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2.1.2.1 Affiliate Transfer. You or any Equity Owner may Transfer an Equity Interest or this Agreement to an Affiliate.
12.2.1.2.2 Transfers to a Family Member or Trust. If you or any Equity Owner as of the Effective Date are a natural person, you and such Equity Owner may Transfer an Equity Interest or this Agreement to an immediate family member (i.e., spouse, children, parents, siblings) or to a trust for your benefit or the benefit of the Equity Owner or the Equity Owner's immediate family members.
12.2.1.2.3 Transfer on Death. On the death of Franchisee or an Equity Owner who is a natural person, this Agreement or the Equity Interest of the deceased Equity Owner may Transfer in accordance with such person's will or, if such person dies intestate, in accordance with laws of intestacy governing the distribution of such person's estate, provided that: (a) the transfer on death is to an immediate family member or to a legal entity formed by such family member(s); and (b) within one (1) year after the death, such family member(s) or entity meet all of our then-current requirements for an approved Transferee.
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)
Based on the 2025 Embassy Suites Franchise Disclosure Document, an 'Equity Owner' is referenced within the context of transferring ownership interests in the franchise. Specifically, the FDD outlines conditions under which you or any Equity Owner may transfer an Equity Interest or the franchise agreement itself. These conditions vary depending on the nature of the transfer.
For instance, transfers can be made to an Affiliate, to an immediate family member (spouse, children, parents, siblings), or to a trust for the benefit of the franchisee or the Equity Owner's immediate family. In the event of death, the agreement or Equity Interest may transfer according to the deceased's will or intestacy laws, provided the transfer is to an immediate family member or a legal entity formed by them, and they meet Embassy Suites's requirements for a transferee within one year.
A 'Change of Ownership Transfer' is defined as any transfer that results in a change of control of the franchisee, the hotel, or the hotel site, or any transfer not described in the aforementioned subsections. Embassy Suites retains the right to consent to such transfers, and the document outlines conditions that must be met for the transfer to proceed, including submission of an application, payment of fees, and ensuring the transferee meets Embassy Suites's business requirements. The FDD also stipulates conditions related to defaults, pending legal matters, and indemnification.
While the FDD excerpts discuss the rights and obligations of Equity Owners in the context of transferring ownership, it does not explicitly define what constitutes an 'Equity Owner'. A prospective franchisee should seek clarification from Embassy Suites on the precise definition of 'Equity Owner' to fully understand their rights and responsibilities under the franchise agreement.