As an Embassy Suites franchisee, am I required to make future investments?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We license the Embassy Suites Hotel system ("System") which consists of the elements, including know-how, we periodically designate to identify hotels operating worldwide under the Brand. The System currently includes the Brand and the Marks; access to the Reservation Service; advertising, publicity and other marketing programs and materials; training programs and materials, standards, specifications and policies for construction, furnishing, operation,
appearance and service of the hotel, and other elements we refer to in the Franchise Agreement, in the Manual or in other communications to you, and programs for our inspecting your Hotel and consulting with you. We may add elements to the System or modify, alter or delete elements of the System.
We franchise the non-exclusive right to use the System in the operation of your Hotel, under the Brand, at a specified location. You must follow the high standards we have established as the essence of the System. You will be required to make future investments.
The Franchise Agreement you sign will provide for new development, conversion, change of ownership, or re-licensing, depending on your situation. These situations are referred to in this Disclosure Document as "New Development," "Conversion," "Change of Ownership," and "Relicensing," respectively. New Development refers to new building construction. Conversion refers to the renovation of an existing building to bring it into compliance with our Brand Standards so that it may operate as a Brand hotel. Change of Ownership refers to the transfer of ownership or control of an existing Brand hotel to a new owner. Re-licensing refers to the grant of a new franchise after the expiration of a prior franchise for the same hotel. Adaptive Reuse is also a category shown on the Franchise Application. It is a form of Conversion.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–15)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, franchisees are required to make future investments in their hotels. This requirement is tied to maintaining the high standards of the Embassy Suites system. These investments can arise in various situations, including new development, conversion, change of ownership, or re-licensing.
New development refers to new building construction, while conversion involves renovating an existing building to meet Embassy Suites' brand standards. Change of ownership occurs when the ownership or control of an existing Embassy Suites hotel is transferred to a new owner. Re-licensing involves granting a new franchise after the expiration of a prior franchise for the same hotel. These situations necessitate investments to ensure the hotel aligns with the brand's standards and offerings.
For a prospective Embassy Suites franchisee, this means budgeting and planning for ongoing capital expenditures throughout the term of the franchise agreement. These investments are essential for keeping the hotel competitive, up-to-date, and compliant with Embassy Suites' evolving brand standards. It is important to discuss the types and estimated costs of these future investments with the franchisor during the due diligence process to fully understand the financial obligations involved in owning and operating an Embassy Suites franchise.