Can an Embassy Suites franchisee lease or sublease commercial space in their eforea spa?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything set forth in the Franchise Agreement to the contrary, you understand and acknowledge that: (i) you may not lease or sublease commercial space in your eforea spa, or enter into concession arrangements for operations in connection with your eforea spa; (ii) neither you nor any affiliate may operate, have operated on your behalf or on behalf of an affiliate, or allow the operation of, another spa in, adjacent to or that is associated in any way with, the Hotel; (iii) you may not enter into a Change of Ownership Transfer for your Hotel unless you are also transferring your eforea spa in the same transaction and you may not enter into a Change of Ownership Transfer for your eforea spa unless you are also transferring your Hotel in the same transaction; and (iv) any Restricted Area granted by Franchisor shall not apply to Franchisee with respect to its eforea spa.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, franchisees are prohibited from leasing or subleasing commercial space within their eforea spa. This restriction is explicitly outlined in the eforea Spa Amendment to the Franchise Agreement. Additionally, franchisees cannot enter into concession arrangements for operations connected to the eforea spa.
This restriction has significant implications for prospective Embassy Suites franchisees. It means they cannot generate revenue by renting out space within the spa to third-party vendors or operators. This limitation could affect the potential profitability of the spa, as it restricts the franchisee's ability to diversify income streams.
The FDD also states that franchisees or their affiliates are not allowed to operate another spa in, adjacent to, or associated with the Hotel. Furthermore, the transfer of the Hotel and the eforea spa must occur in the same transaction, preventing separate sales. Any restricted area granted by the franchisor does not apply to the franchisee regarding its eforea spa.
These stipulations ensure that Embassy Suites maintains control over the operations and branding of its eforea spas, preventing unauthorized use of the space and maintaining brand consistency. Prospective franchisees should carefully consider these restrictions and their potential impact on the spa's business model and revenue generation.