What happens if my Embassy Suites Management Company becomes a Competitor?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, you may not be a Competitor (defined below) and we reserve the right to not approve a Competitor, or any entity that is the exclusive manager for a Competitor through itself or an affiliate, to manage your Hotel. If your Management Company becomes a Competitor, you will have 90 days to retain a qualified substitute Management Company that we approve.
A "Competitor" means any individual or entity that at any time during the Term, whether directly or through an affiliate, owns in whole or in part, or is the licensor or franchisor of, a Competing Brand, irrespective of the number of hotels owned, licensed or franchised by the Competitor under such Competing Brand. A Competitor does not include an individual or entity that: (i) is a franchisee of a Competing Brand; (ii) manages a Competing Brand hotel, so long as the individual or entity is not the exclusive manager of the Competing Brand; or (iii) owns a minority interest in a Competing Brand, so long as neither that individual or entity nor any of its affiliates is an officer, director, or employee of the Competing Brand, or exercises, or has the right to exercise, control over the business decisions of the Competing Brand. A "Competing Brand" means a hotel brand or trade name that, in our sole business judgment, competes with the System or any Network Hotel.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 74–75)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, if your Management Company becomes a Competitor, you have 90 days to retain a qualified substitute Management Company that Embassy Suites approves. A "Competitor" is defined as any entity that owns, licenses, or franchises a Competing Brand, regardless of the number of hotels involved. A "Competing Brand" is a hotel brand or trade name that Embassy Suites, in its sole business judgment, considers competitive with the Embassy Suites system or any Network Hotel.
However, the definition of "Competitor" excludes entities that are franchisees of a Competing Brand, manage a Competing Brand hotel (as long as they are not the exclusive manager), or own a minority interest in a Competing Brand without holding a position as an officer, director, or employee, or exercising control over the business decisions of the Competing Brand.
This means that if your Management Company starts to own or franchise a competing hotel brand, Embassy Suites requires you to replace them within 90 days with a Management Company that meets their approval. This provision aims to protect Embassy Suites from having its hotels managed by entities with a vested interest in promoting competing brands. As a prospective franchisee, it's important to consider the potential for your Management Company to become a Competitor and the implications of needing to find a replacement on short notice.