Can an Embassy Suites franchisee face competition from other franchisees?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We grant franchisees a non-exclusive license to use the System during the term of the Franchise Agreement to operate a franchised hotel at a specified location. There are no provisions in the standard Franchise Agreement granting franchisees a protected area or territory. You will not receive an exclusive territory. You may face competition from other franchisees, from hotels that our affiliates own, or from other channels of distribution or competitive brands that we control. The standard Franchise Agreement permits us to own, operate, manage, franchise, license, lease, or affiliate or associate with any Other Business of any nature, whether in the lodging or hospitality industry or not, and whether under the Brand, a competitive brand, or otherwise, at any time and in any location. We and our affiliates have the right to engage in any Other Businesses, even if they compete with your Hotel, the Brand, System Hotels, or Network Hotels, and whether we or our affiliates start those businesses, or purchase, merge with, acquire, are acquired by, come under common ownership with, affiliate or associate with, such Other Businesses.
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, franchisees may face competition from other franchisees. The standard Franchise Agreement does not grant franchisees a protected or exclusive territory. As such, an Embassy Suites franchisee may face competition from other franchisees, hotels that affiliates own, or from other distribution channels or competitive brands that the company controls.
Embassy Suites has the right to engage in other business activities, even if they compete with a franchisee's hotel. These activities can occur at any time and in any location. This includes the ability to start businesses, purchase existing ones, merge, or affiliate with other businesses, regardless of whether they compete with the franchisee's Embassy Suites hotel. The FDD states that franchisees acknowledge they have no rights to claim damages or other relief from these activities, and Embassy Suites will not be liable for claims of unfair competition or breach of contract.
While Embassy Suites may offer a Restricted Area Provision, it is not guaranteed and typically lasts for a period shorter than the full term of the Franchise Agreement. This provision restricts Embassy Suites and its affiliates from operating or authorizing another Brand hotel within the Restricted Area during the Restrictive Period. However, this protection has exclusions, such as hotels already open or approved for development, hotels under different brands, gaming-oriented hotels, and shared ownership properties. Furthermore, the Restricted Area Provision does not protect against previously existing hotels managed or licensed by Embassy Suites or its affiliates, or any replacement hotels.