What are Embassy Suites franchisees prohibited from stating or implying regarding the franchisor's participation in securities offerings?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not sell any Securities unless you clearly disclose to all purchasers and offerees that we, our Affiliates, and our or their respective officers, directors, agents or employees: (a) will not in any way be deemed an issuer or underwriter of the Securities, as those terms are defined in applicable securities laws; and (b) have not assumed and will not have any liability or responsibility for any financial statements, prospectuses or other financial information contained in any prospectus or similar written or oral communication. You may not state, represent, or imply that we, Hilton Worldwide, or any other of our Affiliates, participate in or endorse any Securities or any Securities offering in any manner whatsoever.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, franchisees are explicitly restricted in how they represent Embassy Suites's involvement in any securities offerings related to their franchise. Specifically, franchisees cannot state, represent, or imply that Embassy Suites, Hilton Worldwide, or any of their affiliates participate in or endorse any securities or securities offering in any manner. This restriction is in place to ensure that potential investors do not misinterpret Embassy Suites's role and to protect Embassy Suites from potential liabilities associated with the franchisee's securities offerings.
This provision is crucial for maintaining a clear distinction between the franchisee's financial activities and Embassy Suites's responsibilities. By prohibiting franchisees from implying endorsement or participation, Embassy Suites aims to avoid being perceived as an issuer or underwriter of the franchisee's securities. This helps Embassy Suites avoid potential legal and financial liabilities related to the franchisee's offerings.
Furthermore, Embassy Suites requires franchisees to disclose to all purchasers and offerees that Embassy Suites and its affiliates are not deemed issuers or underwriters of the securities and bear no liability for any financial information provided in connection with the offering. This disclosure, combined with the prohibition on implying endorsement, ensures that investors understand the independent nature of the franchisee's securities offering and Embassy Suites's limited role.
In addition to these restrictions, Embassy Suites also requires franchisees to indemnify, defend, and hold harmless the franchisor from any liabilities, costs, damages, claims, or expenses arising out of or related to the sale or offer of the franchisee's securities. This indemnification clause further protects Embassy Suites from financial risks associated with the franchisee's securities activities, reinforcing the separation between the franchise system and the individual franchisee's financial endeavors.