How does a Customer Refresh of Authorized Equipment affect the termination fee for Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ed Equipment as described in Section 1 above.
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- Refresh of Authorized Equipment. Under HSS's refreshment program, Customer will be responsible for and will pay for all fees and costs for the replacement or refreshment of the Authorized Equipment in HSS's sole discretion ("Refresh") on an approximate three (3) year cycle, starting approximately three (3) years after the initial shipment of such Authorized Equipment and for the provision of maintenance services by the Preferred Provider on such refreshed equipment. The terms and conditions of the Authorized Equipment maintenance services for such equipment (included in such initial Refresh and included in any additional Refresh or Refreshes of Customer's Authorized Equipment) will be the same a
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a Customer Refresh of Authorized Equipment impacts the termination fee. If the agreement is terminated, or if the customer's use of the Preferred Provider is terminated, after a Customer Refresh of Authorized Equipment, the termination fee depends on the time elapsed after the start date applicable to the shipment of such Authorized Equipment for each successive Customer Refresh.
Specifically, if termination occurs during the first year following the Start Date after a refresh, the termination fee is $3,800. If termination occurs during the second year, the fee is $2,800, and during the third year, it is $1,400. After the third year, the termination fee is $1,200. These amounts differ from the standard termination fees if no refresh has occurred.
Without a refresh, the termination fees are $3,600 during the first year, $2,600 during the second year, $1,300 during the third year, and $1,200 thereafter. Therefore, a refresh generally increases the termination fee during the first three years following the refresh, reflecting the unamortized costs associated with the new equipment. This incentivizes franchisees to maintain the agreement for a longer period after a refresh.