After the Embassy Suites Franchise Agreement terminates or expires, will I or my Management Company be required to sign an agreement not to compete?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We will not require you or your Management Company to sign an agreement not to compete with us after the Franchise Agreement terminates or expires. However, you may not engage, directly or indirectly, in any cross-marketing or cross-promotion of your Hotel with any other hotel, motel or related business without our prior written consent, except for System Hotels or Network Hotels. You and your Management Company must not copy or disclose any confidential or proprietary materials without our prior written consent.
In addition, you may not be a Competitor (defined below) and we reserve the right to not approve a Competitor, or any entity that is the exclusive manager for a Competitor through itself or an affiliate, to manage your Hotel. If your Management Company becomes a Competitor, you will have 90 days to retain a qualified substitute Management Company that we approve.
A "Competitor" means any individual or entity that at any time during the Term, whether directly or through an affiliate, owns in whole or in part, or is the licensor or franchisor of, a Competing Brand, irrespective of the number of hotels owned, licensed or franchised by the Competitor under such Competing Brand. A Competitor does not include an individual or entity that: (i) is a franchisee of a Competing Brand; (ii) manages a Competing Brand hotel, so long as the individual or entity is not the exclusive manager of the Competing Brand; or (iii) owns a minority interest in a Competing Brand, so long as neither that individual or entity nor any of its affiliates is an officer, director, or employee of the Competing Brand, or exercises, or has the right to exercise, control over the business decisions of the Competing Brand. A "Competing Brand" means a hotel brand or trade name that, in our sole business judgment, competes with the System or any Network Hotel.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 74–75)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, neither the franchisee nor their Management Company will be required to sign an agreement not to compete with Embassy Suites after the Franchise Agreement terminates or expires. However, franchisees are prohibited from engaging in any cross-marketing or cross-promotion of their hotel with any other hotel, motel, or related business without Embassy Suites' prior written consent, unless it involves System Hotels or Network Hotels. Additionally, franchisees and their Management Companies are barred from copying or disclosing any confidential or proprietary materials without prior written consent from Embassy Suites.
Furthermore, the FDD states that franchisees may not be a Competitor, and Embassy Suites reserves the right to disapprove a Competitor, or any entity that is the exclusive manager for a Competitor through itself or an affiliate, to manage the franchisee's Hotel. If a franchisee's Management Company becomes a Competitor, the franchisee will have 90 days to retain a qualified substitute Management Company that Embassy Suites approves.
A "Competitor" is defined as any individual or entity that, at any time during the Term, owns in whole or in part, or is the licensor or franchisor of, a Competing Brand, irrespective of the number of hotels owned, licensed, or franchised by the Competitor under such Competing Brand. A "Competing Brand" means a hotel brand or trade name that, in Embassy Suites' sole business judgment, competes with the System or any Network Hotel. This definition excludes franchisees of a Competing Brand, entities managing a Competing Brand hotel if they are not the exclusive manager, and those owning a minority interest in a Competing Brand without holding an officer, director, or employee position or exercising control over business decisions.