What happens if a Guarantor breaches their guaranty to Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement (“FA”), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| failure to operate is due to an Event of Force Majeure provided that you have taken reasonable steps to minimize the impact of such events; | ||
| FA §13.2 (7) | you contest in any court or proceeding our ownership of the System or any part of the System or the validity of any of the Marks; | |
| FA §13.2 (8) | you or any Equity Owner with a controlling Equity Interest, or any of your Affiliates, employees, or Management Company, engage in conduct that we reasonably determine is likely to adversely reflect upon or affect in any manner the reputation, goodwill, or business of the Hotel, the System, us and/or our Affiliates; | |
| FA §13.2 (9) | you conceal revenues, maintain false books and records of accounts, submit false reports or information to us or otherwise attempt to defraud us; | |
| FA §13.2 (10) | you Transfer any interest that is not in compliance with the Franchise Agreement; | |
| FA §13.2 (11) | you, your Affiliate or any Guarantor become a Sanctioned Person or are owned or controlled by a Sanctioned Person or otherwise breach the representations in the Franchise Agreement; | |
| FA §13.2 (12) | Information is disclosed involving you or your Affiliates, which, in our business judgment, is likely to adversely reflect on or affect in any manner, any gaming licenses or permits held by us or our affiliates or the then-current stature of us or any of our affiliates with any gaming commission, board, or similar governmental or regulatory agency; | |
| FA §13.2 (13) | any Guarantor breaches its guaranty to us; |
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 any Guarantor breaches their guaranty to Embassy Suites, it constitutes an event of default under the Franchise Agreement. Specifically, it is listed as one of the conditions that allows Embassy Suites to terminate the franchise agreement.
This means that the failure of a Guarantor to uphold their obligations, as defined in the guaranty, gives Embassy Suites the right to terminate the franchise agreement. The guaranty is a legal promise made by the Guarantor to ensure the franchisee fulfills its financial or other obligations to Embassy Suites. A breach could involve failing to cover financial shortfalls or any other violation of the terms outlined in the guaranty.
For a prospective Embassy Suites franchisee, this underscores the importance of the Guarantor fully understanding their responsibilities and financial exposure under the guaranty. The franchisee needs to ensure that the Guarantor is capable and willing to meet these obligations, as their failure to do so can lead to the termination of the franchise agreement and the loss of the business.