What does 'Control' mean in the context of the Embassy Suites Franchise Agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
n described in the Addendum.
NOW, THEREFORE, in consideration of the premises and the undertakings and commitments of each Party to the other Party in this Agreement, the Parties agree as follows:
1.0 DEFINITIONS
The following capitalized terms will have the meanings set forth after each term:
- "Affiliate" means any natural person or firm, corporation, partnership, limited liability company, association, trust or other entity which, directly or indirectly, Controls, is Controlled by, or is under common Control with, the subject entity.
- "Agreement" means this Franchise Agreement, including any exhibits, attachments and addenda.
- "Anti-Corruption Laws" means all applicable anti-corruption, anti-bribery, anti-money laundering, books and records, and internal controls laws.
- "Brand" means the brand name set forth in the Addendum.
- "Chain Code" means the code that we use to identify the Brand within our Reservation Service. We may modify, remove, or replace the Chain Code for the Brand at any time in our discretion.
- "Change of Ownership Application" means the application that is submitted to us by you or the Transferee for a new franchise agreement in connection with a Change of Ownership Transfer.
- "Change of Ownership Transfer" means any proposed Transfer that results in a change of Control of Franchisee, the Hotel, or the Hotel Site and is not otherwise permitted by this Agreement, all as set out in Subsection 12.2.2.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, the term 'Control' is used in the definition of 'Affiliate' and 'Change of Ownership Transfer.' An 'Affiliate' is defined as any entity that directly or indirectly Controls, is Controlled by, or is under common Control with, the subject entity. A 'Change of Ownership Transfer' means any proposed Transfer that results in a change of Control of Franchisee, the Hotel, or the Hotel Site and is not otherwise permitted by this Agreement.
This definition is important because it clarifies the scope of relationships that could impact the franchise agreement. For example, if a franchisee is considering a transfer of ownership, any change in 'Control' would trigger specific requirements and potentially require franchisor approval. Similarly, the definition of 'Competitor' excludes entities that own a minority interest in a Competing Brand as long as they do not exercise, or have the right to exercise, Control over the business decisions of the Competing Brand.
Prospective Embassy Suites franchisees should pay close attention to this definition, as it has implications for ownership transfers, potential conflicts of interest, and the overall structure of their business. Understanding what constitutes 'Control' is crucial for remaining compliant with the franchise agreement and avoiding potential disputes with Embassy Suites.