Are employee gratuities included in 'Mandatory Guest Fees' for an Embassy Suites franchise?

According to Embassy Suites's 2025 Franchise Disclosure Document, employee gratuities are not included in the definition of 'Mandatory Guest Fees.' The FDD specifies that 'Mandatory Guest Fee' refers to any separate charge to a patron or guest in addition to the base room rate. Examples of these fees include resort fees, facility fees, destination fees, amenity fees, and urban destination fees.

The document explicitly states that 'Mandatory Guest Fees do not include employee gratuities, state or local mandatory taxes, and other tax-like fees and assessments that are levied on a stay, as determined by us, that are passed through to a third party (such as tourism public improvement district fees, tourism or improvement assessments, and convention center fees).' This means that while Embassy Suites franchisees may charge guests various mandatory fees for amenities and services, these fees should not incorporate any amounts intended for employee tips or gratuities.

For a prospective Embassy Suites franchisee, this distinction is important for several reasons. It clarifies how revenue is categorized for royalty fee calculations, ensures compliance with fee structures, and dictates how employee compensation through gratuities should be managed separately. Understanding this definition helps in accurately calculating Gross Rooms Revenue, which is the basis for Monthly Royalty Fees, and ensures transparency in pricing for guests.