How does Embassy Suites define a 'Competing Brand' in relation to its System?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
- "Competing Brand" means a hotel brand or trade name that, in our sole business judgment, competes with the System, or any System Hotel or Network Hotel.
- "Competitor" means any individual or entity that, at any time during the Term, whether directly or through an Affiliate, owns in whole or in part, or is the licensor or franchisor of a Competing Brand, irrespective of the number of hotels owned, licensed or franchised under such Competing Brand name. A Competitor does not include an individual or entity that: (i) is a franchisee of a Competing Brand; (ii) manages a Competing Brand hotel, so long as the individual or entity is not the exclusive manager of the Competing Brand;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, a 'Competing Brand' is defined as a hotel brand or trade name that, in Embassy Suites' sole business judgment, competes with the Embassy Suites system, any Embassy Suites hotel, or any Network Hotel.
This definition grants Embassy Suites significant discretion in determining what constitutes a competing brand. This is important for prospective franchisees because it could impact their ability to invest in or operate other hotel brands, even after their franchise agreement with Embassy Suites ends. The FDD also defines a 'Competitor' as any individual or entity that owns, licenses, or franchises a Competing Brand, irrespective of the number of hotels owned, licensed, or franchised under such Competing Brand name. However, this excludes franchisees of a Competing Brand, managers of a Competing Brand hotel (unless they are the exclusive manager), and those with a minority interest in a Competing Brand who do not exert control over its business decisions.
This broad definition of 'Competing Brand' and 'Competitor' has implications for franchisees regarding transfers or renewals of their franchise agreement. For example, if a franchisee attempts to transfer their Embassy Suites franchise to a Competitor, Embassy Suites can terminate the agreement. Similarly, if a buyer converts the hotel to a Competing Brand within two years of the agreement's termination, it can trigger certain penalties or consequences as outlined in the franchise agreement.
Prospective franchisees should carefully consider this definition and how it might affect their future business endeavors. It would be prudent to seek clarification from Embassy Suites regarding specific brands that they consider to be competing and under what circumstances a franchisee's involvement with another hotel brand might be considered a conflict of interest.