What happens if an Embassy Suites franchisee fails to maintain the required insurance?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.1.22 after the Effective Date, maintain, at your expense, insurance of the types and in the minimum amounts we specify in the Standards.
All such insurance must be with insurers having the minimum ratings we specify, name as additional insureds the parties we specify in the Standards, and carry the endorsements and notice requirements we specify in the Standards.
If you fail or neglect to obtain or maintain the insurance or policy limits required by this Agreement or the Standards, we have the option, but not the obligation, to obtain and maintain such insurance without notice to you, and you will immediately on our demand pay us the premiums and cost we incur in obtaining this insurance;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Embassy Suites has the option, but not the obligation, to obtain and maintain such insurance without notice to the franchisee. The franchisee is then required to immediately pay Embassy Suites the premiums and costs incurred in obtaining this insurance.
Maintaining the required insurance is a crucial aspect of the franchise agreement. The insurance types and minimum amounts are specified in the Standards, along with the required minimum ratings for insurers, the parties to be named as additional insureds, and any necessary endorsements and notice requirements. These standards ensure that both the franchisee and Embassy Suites are protected against potential liabilities and risks associated with operating the hotel.
This provision in the franchise agreement highlights the importance of adhering to the insurance requirements set forth by Embassy Suites. By reserving the right to obtain insurance on behalf of a non-compliant franchisee, Embassy Suites protects its brand and interests, ensuring continuous coverage and minimizing potential disruptions to the business. The franchisee's responsibility to promptly reimburse Embassy Suites for these insurance costs underscores the financial obligation associated with maintaining adequate coverage.