What is the definition of 'Sanctioned Person' in the context of the Embassy Suites franchise agreement?

According to Embassy Suites' 2025 Franchise Disclosure Document, a "Sanctioned Person" is defined in the context of lender agreements with the franchisor. Specifically, it refers to any person, entity, or government, including those with control over such persons or entities, or acting on their behalf, who is subject to trade restrictions. These trade restrictions must prohibit or restrict the parties' ability to fulfill their obligations under the franchise agreement. This definition is crucial when a lender acquires possession or ownership of the hotel due to an acquisition.

The definition of "Sanctioned Person" is important to Embassy Suites because it ensures that any lender assuming the franchise agreement is not restricted by trade, economic, or investment sanctions, export controls, anti-terrorism, nonproliferation, anti-money laundering, or similar restrictions. These restrictions are imposed under laws, rules, and regulations to which the parties are subject. This verification process is part of the due diligence that Embassy Suites undertakes to maintain compliance with applicable laws and regulations and to protect its brand reputation.

For a prospective Embassy Suites franchisee, this definition may not directly impact their day-to-day operations. However, it is relevant if they seek financing from a lender who might later need to assume the franchise agreement. The franchisee should ensure that their lenders are aware of this requirement and can provide the necessary information to Embassy Suites to confirm they are not a Sanctioned Person. This requirement helps to ensure the stability and legality of the franchise operation, even in the event of a lender assuming control.