What happens if an Embassy Suites franchisee transfers an interest in non-compliance with the Franchise Agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement (“FA”), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| FA §13.2 (10) | you Transfer any interest that is not in compliance with the Franchise Agreement; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, if a franchisee transfers any interest in a way that does not comply with the Franchise Agreement, it constitutes a breach of the agreement. Specifically, FA §13.2 (10) states that transferring any interest not in compliance with the Franchise Agreement is grounds for termination of the agreement.
Embassy Suites outlines specific conditions and procedures for transferring ownership. Any transfer of interest in the hotel, the hotel site, or the Franchise Agreement itself is prohibited unless expressly allowed within the agreement. The Franchise Agreement permits two types of transfers if certain conditions are met: Permitted Transfers and Change of Ownership Transfers. All proposed transferees must not be a Sanctioned Person or a Competitor.
Permitted Transfers, which do not result in a change of control, may be completed without prior notice or consent in certain cases, such as transfers of publicly traded equity interests or privately held equity interests where the transferee holds less than 50% after the transfer. Other permitted transfers require 60 days' written notice and Embassy Suites' consent. Given these stipulations, franchisees must adhere to the outlined transfer protocols to avoid violating the Franchise Agreement, which could lead to termination.