Does the Embassy Suites FDD Item 6 specify if fees are negotiable?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Spa Revenue" means all revenue from services and retail sales of products from the eforea spa, less allowances for spa rebates and overcharges, but does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa.
If there is a fire or other insured casualty at your Hotel that results in a reduction of Gross Rooms Revenue or Gross Spa Revenue, the Monthly Program, and Monthly Royalty Fees will be equal to the Monthly Program, and Monthly Royalty Fees forecasted on the basis of the Gross Rooms Revenue amount and Gross Spa Revenue you agree on with your insurer(s). However, we have the right to participate with you in negotiating the value of your Gross Rooms Revenue claim with your insurer(s).
We can require you to transmit all payments required under the Franchise Agreement by wire transfer or other form of electronic funds transfer. You must bear all costs of wire transfer or other form of electronic funds transfer. We may reduce the amount of any payment or credit to you by any amount that you owe us, and this includes your and our affiliates. We occasionally reduce the Monthly Royalty Fee for multi-unit or more experienced franchisees, for franchisees with whom we have previously dealt, for Conversions, or for franchisees in other unique circumstances. However, we do not always do so and may choose not to reduce your Monthly Royalty Fee, even if you possess some or all of these characteristics. We agreed to modify the Monthly Royalty Fee in 6 instances during 2024.
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Item 6 addresses the negotiability of fees. While most fees are non-refundable and subject to change, there are exceptions regarding the Monthly Royalty Fee. Specifically, Embassy Suites may, on occasion, reduce the Monthly Royalty Fee for multi-unit or more experienced franchisees, for franchisees with whom they have previously dealt, for Conversions, or for franchisees in other unique circumstances. However, the document states that Embassy Suites is not obligated to do so, even if a franchisee meets some or all of these criteria. In 2024, Embassy Suites agreed to modify the Monthly Royalty Fee in 6 instances.
This indicates that while the standard fees are generally fixed, there is a possibility for negotiation on the Monthly Royalty Fee under specific circumstances. A prospective franchisee should not assume a reduction will be granted, even if they have prior experience or multiple units. The decision to reduce the fee is at the discretion of Embassy Suites.
For a prospective franchisee, this means that while most fees listed in Item 6 are non-negotiable, there may be room to negotiate the Monthly Royalty Fee, particularly if they have relevant experience or are undertaking a conversion. However, they should be prepared to pay the standard fee, as Embassy Suites is not obligated to offer a reduction. It would be prudent for potential franchisees to discuss their specific circumstances with Embassy Suites during the franchise application process to understand if a fee reduction is possible.
It is important to note that the FDD specifies that Embassy Suites has the right to participate with the franchisee in negotiating the value of Gross Rooms Revenue claims with their insurer(s) in the event of a fire or other insured casualty at the hotel that results in a reduction of Gross Rooms Revenue or Gross Spa Revenue. This highlights the importance of understanding all the terms and conditions related to fees and revenue calculations before entering into a franchise agreement with Embassy Suites.