Where can I find the specific provisions regarding renewal, termination, transfer, and dispute resolution for the Embassy Suites franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
This table lists certain important provisions of the Franchise Agreement and related agreements pertaining to renewal, termination, transfer, and dispute resolution. You should read these provisions in the agreements attached to this Disclosure Document.
| Provision | Section in Franchise Agreement ("FA"), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| j. Assignment of contract by us | FA §12.1 | We may assign or transfer the Franchise Agreement and any of our rights, duties or assets to any person or entity without your consent so long as the assignee assumes all of our obligations to permit you to operate the Hotel. |
| k. "Transfer" by you – definition | FA §§1 and 12.2 | Any sale, lease, assignment, spin-off, transfer, or other conveyance of a direct or indirect legal or beneficial interest, including a transfer of an interest the hotel, the Franchise Agreement, the site on which the hotel is located or any direct or indirect Equity Interest (as defined in the Franchise Agreement). You may not transfer to a Competitor or a Sanctioned Person. |
| l. Our approval of transfer by you | FA §12.2 | A Transfer of any interest in you, the Hotel, the Hotel Site, or the Franchise Agreement (or any rights or obligations under it) are prohibited unless expressly allowed in the Franchise Agreement. The Franchise Agreement allows 2 types of Transfers if certain conditions are satisfied: (a) Permitted Transfers; and (b) Change of Ownership Transfers. In any Transfer, the proposed Transferee may not be a Sanctioned Person or a Competitor. |
| i. Your | On termination or expiration of the Franchise Agreement you | |
| obligations on FA §13.6 | must immediately: | |
| w. Choice of law | FA §16.2.1 | New York law applies, without recourse to New York choice of |
| law on conflicts of law principles, except to the extent governed | ||
| by the United States Trademark Act of 1946 (Lanham Act, 15 | ||
| USC § 1050) (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, Item 17 and related agreements contain important provisions pertaining to renewal, termination, transfer, and dispute resolution. Item 17 provides a table that summarizes these provisions, with references to specific sections in the Franchise Agreement, Spa Amendment, and HITS Agreement where the full details can be found. Prospective franchisees are advised to carefully review these referenced sections within the agreements attached to the Disclosure Document to fully understand their rights and obligations.
Regarding transfers, any sale, lease, assignment, or conveyance of interest in the hotel, Franchise Agreement, or site is considered a transfer. The Franchise Agreement outlines two types of transfers: Permitted Transfers and Change of Ownership Transfers, each with specific conditions. Notably, transfers to Competitors or Sanctioned Persons are prohibited. The franchisor's approval is required for most transfers, and the HITS Agreement specifies that franchisees have no right to assign the HITS Agreement, although assignment may be permitted in the event of a Change of Ownership transfer of the Franchise Agreement.
Concerning termination, the Franchise Agreement specifies various conditions under which termination may occur. These include instances where the franchisee fails to comply with the agreement, contests the franchisor's ownership of the system, engages in conduct that adversely affects the brand's reputation, conceals revenues, or transfers interests in non-compliance with the agreement. Termination can also result from becoming a Sanctioned Person or Competitor, or if a threat to public health or safety arises from the hotel's operation. Upon termination or expiration of the Franchise Agreement, the franchisee has specific obligations, such as ceasing use of the franchisor's intellectual property.
In terms of dispute resolution, New York law applies, without regard to its choice of law principles, except as governed by the United States Trademark Act. The venue for actions will be in a court of competent jurisdiction in either Fairfax County, Virginia, or New York, New York, although Embassy Suites may elect to bring an action against you where the hotel is located. For Puerto Rico arbitration actions, the venue will be Fairfax County, Virginia, and the seat of the arbitration will be New York, New York. The HITS Agreement follows the same stipulations as the Franchise Agreement.