For Embassy Suites, what happens to franchise deposits if the franchise application is not approved?

According to Embassy Suites' 2025 Franchise Disclosure Document, franchise deposits are treated as a current liability on the company's balance sheet until they become non-refundable. These deposits consist of application, initiation, and other fees collected when a hotel owner applies for a franchise license. If Embassy Suites does not approve a franchise application, the deposit is recorded as an other current liability until it is refunded to the applicant.

For a prospective Embassy Suites franchisee, this means that the initial deposit submitted with the franchise application is potentially refundable if the application is denied. However, the refund may be less any processing fees that Embassy Suites might deduct. The FDD indicates that the deposit remains a liability on Embassy Suites' balance sheet until the application is approved and the fees become non-refundable, or until the deposit is refunded.

It is important for potential franchisees to clarify what specific processing fees might be deducted from the deposit if the application is not approved. Understanding these potential deductions upfront can help in making an informed decision about pursuing a franchise with Embassy Suites. This policy ensures that Embassy Suites accounts for these deposits transparently and provides a mechanism for refunding them if the franchise agreement is not finalized.