How does the Embassy Suites Franchise Agreement define 'transfer' by the franchisee?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement ("FA"), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| return all copies of the eforea spa Manual, cancel all assumed | ||
| name or equivalent registrations and transfer any domain name | ||
| listings and registrations that contain any reference to the eforea | ||
| name to us, and cease representing yourself or the hotel as then | ||
| or formerly operating an eforea spa. | ||
| HITS Agreement 4.2 | You must stop using our software and related documents, return | |
| all copies to us, and certify to us that you have done so. | ||
| 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. |
| HITS Agreement 2.1 | HSS may delegate its operational responsibilities under the | |
| HITS Agreement to third parties but remains responsible. | ||
| 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. |
| HITS Agreement – Not applicable | Transfer is not defined in the HITS Agreement. We consider any attempt on your part to transfer or assign any of your rights or obligations under the HITS Agreement to be a "transfer" by you. | |
| 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. |
| HITS Agreement 2.1 | You have no right to assign the HITS Agreement. If there is a | |
| Change of Ownership transfer of the Franchise Agreement, we | ||
| may permit the HITS Agreement to be assigned. | ||
| m. Conditions for | FA §12.2.1 | Permitted Transfers are Transfers that will not result in a change |
| our approval of | of Control of you, the Hotel, or the Hotel Site. | |
| transfer. | FA §12.2.1.1 | You may complete the following types of Permitted |
| Transfers without giving us notice or obtaining our consent: | ||
| Transfers of (a) Publicly Traded Equity Interests; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, a 'transfer' by the franchisee is comprehensively defined within the agreement. It encompasses any sale, lease, assignment, spin-off, or other conveyance of a direct or indirect legal or beneficial interest. This definition extends to transfers of interest in the hotel itself, the Franchise Agreement, the site where the hotel is located, or any direct or indirect Equity Interest as defined in the Franchise Agreement.
The Franchise Agreement emphasizes that franchisees cannot transfer any interest to a Competitor or a Sanctioned Person. Furthermore, any transfer of interest in the franchisee, the hotel, the hotel site, or the Franchise Agreement requires express permission as outlined in the agreement. Embassy Suites permits two types of transfers if certain conditions are met: Permitted Transfers and Change of Ownership Transfers.
Permitted Transfers are those that do not result in a change of control of the franchisee, the hotel, or the hotel site. Certain types of Permitted Transfers, such as transfers of Publicly Traded Equity Interests, privately held Equity Interests where the transferee holds less than 50% after the transfer, and transfers within designated institutional investment funds, can be completed without prior notice or consent from Embassy Suites. However, other Permitted Transfers require 60 days' written notice and the franchisor's consent unless they qualify under the aforementioned exceptions.
The HITS Agreement, related to hotel information technology systems, does not define 'transfer,' but Embassy Suites considers any attempt by the franchisee to transfer or assign rights or obligations under the HITS Agreement as a 'transfer.' Franchisees have no right to assign the HITS Agreement, although Embassy Suites may permit its assignment in the event of a Change of Ownership transfer of the Franchise Agreement.