When are Embassy Suites franchise royalty fees typically billed and collected?

According to Embassy Suites's 2025 Franchise Disclosure Document, franchise royalty fees are generally based on a percentage of the hotel's monthly gross room revenue. In some instances, these fees may also include a percentage of gross food and beverage revenues and other revenues. These royalty fees are typically billed and collected on a monthly basis. Embassy Suites recognizes the revenue as services are provided. This means that franchisees can expect to remit royalty payments to Embassy Suites monthly, based on the revenue generated by their hotel.

This consistent monthly billing and collection cycle allows Embassy Suites to maintain a steady revenue stream and provides franchisees with a predictable payment schedule. Franchisees should ensure they have systems in place to accurately track and report their gross room, food and beverage, and other applicable revenues to facilitate accurate royalty fee calculations. Understanding the specific percentages applied to each revenue stream is crucial for financial planning and budgeting.

Furthermore, the FDD mentions that consideration paid to incentivize hotel owners to enter into franchise contracts is amortized over the life of the contract, which generally includes any extension periods at Embassy Suites's sole option. This amortization is recognized as a reduction to franchise royalty fees. This could potentially lower the royalty fees for some franchisees, particularly in the early years of the franchise agreement, depending on the incentives provided.