What constitutes 'good cause' for Embassy Suites to terminate a franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, 'good cause' for refusing a franchise transfer includes several specific conditions. These conditions primarily relate to the qualifications and conduct of the proposed transferee.
Specifically, Embassy Suites may refuse a transfer if the proposed transferee does not meet the brand's current reasonable qualifications or standards. This ensures that new franchisees maintain the operational and quality standards expected by Embassy Suites. A transfer may also be denied if the proposed transferee is a competitor of Embassy Suites, preventing potential conflicts of interest and protecting the brand's competitive position.
Additionally, Embassy Suites can block a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the franchise agreement and relevant laws. Finally, 'good cause' includes situations where the franchisee or proposed transferee has failed to pay sums owed to Embassy Suites or has not cured any default in the Franchise Agreement at the time of the proposed transfer, addressing financial and contractual compliance issues. These stipulations aim to protect the Embassy Suites brand and maintain consistent standards across all franchise locations.