What is the form number of the development incentive note for Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
To receive an Incentive, you and your principals must sign a development incentive note ("Note") in the form attached as Exhibit D-2 when you sign the Franchise Agreement. An Incentive does not have to be repaid, unless the franchise terminates before the end of the Term or a transfer occurs as described below. The Incentive will be disbursed to you within 30 days after the Hotel opens with our consent, as long as: (a) there have been no material adverse changes in the business, legal, litigation, bankruptcy status or finances of you, any guarantors, or the project since we granted approval; (b) you have completed any required PIP; and (c) you have paid the Franchise Application Fee.
Source: Item 10 — FINANCING (FDD pages 52–53)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, to receive a development incentive, franchisees and their principals must sign a development incentive note. The specific form for this note is attached as Exhibit D-2 to the Franchise Agreement. This means that prospective Embassy Suites franchisees should review Exhibit D-2 to understand the terms and conditions of the development incentive note before signing the Franchise Agreement.
The development incentive is a financial contribution from Embassy Suites to assist with the development or conversion of a hotel. This incentive does not have to be repaid unless the franchise terminates early or a transfer occurs without Embassy Suites's permission. The repayable amount decreases over time, with an equal annual percentage reduction based on the term of the franchise. For instance, a 10-year term reduces the amount by 1/10th annually, while a 20-year term reduces it by 1/20th annually.
The incentive itself does not bear interest. However, if repayment is required and not made on time, the outstanding amount is subject to interest at 1.5% per month or the highest rate allowed by law. Embassy Suites may also reduce the incentive amount disbursed by any amounts owed to them or their affiliates. Franchisees are prohibited from using any portion of the incentive for improper payments or acts violating anti-corruption laws and must cooperate with information requests and inspections related to this.