Does the Embassy Suites franchise agreement require the franchisee to indemnify the franchisor for any breach of representations and warranties?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
14.1.7 your failure to comply with Subsection 16.13, including a breach of the representations set forth therein;
14.2 You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, error
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, the franchisee is required to indemnify the franchisor under certain circumstances, including those related to breaches of representations and warranties. Specifically, the franchisee must indemnify Embassy Suites against losses, costs, and expenses arising from the franchisee's failure to comply with Subsection 16.13, which includes breaches of the representations set forth therein. This means that if the franchisee makes false or inaccurate statements in their franchise application or other documents submitted to Embassy Suites, and this leads to losses or legal issues for Embassy Suites, the franchisee will be responsible for covering those costs.
This indemnification requirement extends to various other situations as well, such as claims related to occurrences at the hotel (including personal injury or property damage), infringement of intellectual property rights, violations of contracts or laws, and issues arising from the fees charged to guests. However, the franchisee is not required to indemnify Embassy Suites if the damages are solely the result of the gross negligence or willful misconduct of Embassy Suites itself, as determined by a court of law.
For a prospective Embassy Suites franchisee, this means carefully reviewing all representations and warranties made to the franchisor to ensure they are accurate and complete. Any misstatements or omissions could lead to significant financial liabilities down the road. It is also important to understand the scope of the indemnification clause and the types of claims that could trigger this obligation. Franchisees should also ensure they have adequate insurance coverage to protect against potential indemnification claims.
It's worth noting that Minnesota franchisees have some additional protections. The Minnesota Addendum to the Franchise Agreement clarifies that Embassy Suites must indemnify the franchisee against liability to third parties resulting from trademark infringement claims. This addendum also modifies certain provisions of the Franchise Agreement to comply with Minnesota law, such as those related to termination rights and waivers. New York franchisees also have some additional protections, such as modifications to consent for injunctions and releases from liability.