Can an Embassy Suites franchisee transfer to a Competitor?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement ("FA"), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| k. "Transfer" by you – definition | FA §§1 and 12.2 | Any sale, lease, assignment, spin-off, transfer, or other conveyance of a direct or indirect legal or beneficial interest, including a transfer of an interest the hotel, the Franchise Agreement, the site on which the hotel is located or any direct or indirect Equity Interest (as defined in the Franchise Agreement). You may not transfer to a Competitor or a Sanctioned Person. |
| l. Our approval of transfer by you | FA §12.2 | A Transfer of any interest in you, the Hotel, the Hotel Site, or the Franchise Agreement (or any rights or obligations under it) are prohibited unless expressly allowed in the Franchise Agreement. The Franchise Agreement allows 2 types of Transfers if certain conditions are satisfied: (a) Permitted Transfers; and (b) Change of Ownership Transfers. In any Transfer, the proposed Transferee may not be a Sanctioned Person or a Competitor. |
| FA §13.2 (15) | you, your Affiliate or any Guarantor become a Competitor except as otherwise permitted by Subsection 5.1.29; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, a franchisee is generally prohibited from transferring their interest to a Competitor. The FDD outlines specific conditions under which a transfer is not allowed.
Specifically, the definition of "Transfer" includes any sale, lease, assignment, spin-off, or other conveyance of a direct or indirect legal or beneficial interest in the hotel, the Franchise Agreement, the site, or any Equity Interest. The document explicitly states that a franchisee may not transfer to a Competitor. This restriction applies to all types of transfers, including Permitted Transfers and Change of Ownership Transfers, meaning that any proposed transferee cannot be a Competitor.
This restriction is further reinforced by the fact that becoming a Competitor, unless otherwise permitted by Subsection 5.1.29 of the Franchise Agreement, can be grounds for termination of the Franchise Agreement. This indicates the importance Embassy Suites places on preventing its franchisees from associating with competing businesses.
Therefore, a prospective Embassy Suites franchisee should be aware that they cannot transfer their franchise to a Competitor and that becoming a Competitor themselves could lead to termination of their agreement. It would be prudent to carefully review Subsection 5.1.29 of the Franchise Agreement to understand any exceptions or conditions that might apply.