Does the Embassy Suites franchisee's indemnification obligation extend to violations of industry standards?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
14.1.5 your alleged or actual violation or breach of any contract (including any group sales agreement for the System), any Law, or any industry standard;
14.2 You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, errors, omissions, negligence or misconduct of you or anyone related to you or the Hotel.
You may not rely on this exception to your indemnity obligation if the claims were asserted against us or any other Indemnified Party on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or our failure to compel you to comply with the provisions of this Agreement, including compliance with Standards, Laws or other requirements.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the franchisee's indemnification obligations do extend to violations of industry standards. Specifically, the franchisee must indemnify Embassy Suites for losses resulting from the franchisee's alleged or actual violation or breach of any contract, law, or industry standard. This means that if an Embassy Suites franchisee fails to meet the standards expected within the hotel industry and this failure leads to a claim or loss, the franchisee is responsible for covering the costs.
However, the franchisee does not have to indemnify Embassy Suites if a court determines that the damages were solely the result of the gross negligence or willful misconduct of Embassy Suites itself, provided that the franchisee or anyone related to them or the hotel did not contribute to the issue. This exception does not apply if the claims against Embassy Suites are based on theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or Embassy Suites's failure to compel the franchisee to comply with standards, laws, or other requirements.
This indemnification clause is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's operations. Prospective Embassy Suites franchisees should carefully consider this obligation and ensure they understand the industry standards applicable to their hotel operations. Maintaining compliance with these standards is crucial to avoid potential indemnification claims.