Can HSM negotiate special purchase arrangements with manufacturers and suppliers for Embassy Suites franchisees that operate multiple hotels?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
HSM, a wholly-owned subsidiary of Hilton, negotiates with third-party manufacturers and suppliers for the distribution of hotel furniture, furnishings, fixtures, finishes, equipment and supplies, certain food and beverage supplies, and certain hotel services. You may but are not obligated to purchase specified items from HSM or such third parties, except as described in this Disclosure Document. HSM seeks to negotiate lower prices and preferred terms with manufacturers and suppliers, and then passes these benefits on to franchisees. HSM cannot guarantee that every item sourced under its program will provide a lower cost or better terms than are otherwise available in the market. HSM may negotiate purchase arrangements with manufacturers and suppliers for the benefit of our franchisees, all System Hotels, all Network Hotels, or any subset of each. Occasionally, HSM may negotiate special purchase arrangements with manufacturers and suppliers for franchisees or their management companies that operate multiple hotels. HSM may also permit competitor hotels or their management companies to participate in its purchase arrangements. This is done to help increase HSM's overall purchasing volume and bargaining power.
Except as discussed below, you may purchase the furniture, fixtures, and equipment ("FF&E") and other supplies for your Hotel from any source as long as the Standards are met. However, in the future, we may require you to purchase FF&E and supplies from a supplier approved by us, or we may require you to purchase a particular brand or model of supplies or equipment that is available only from one source, and we may derive revenue as a result of those purchases.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 45–50)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, HSM (a wholly-owned subsidiary of Hilton) may negotiate special purchase arrangements with manufacturers and suppliers for franchisees or their management companies that operate multiple hotels. HSM negotiates with third-party manufacturers and suppliers for the distribution of hotel furniture, furnishings, fixtures, finishes, equipment and supplies, certain food and beverage supplies, and certain hotel services.
HSM aims to secure lower prices and preferred terms with these manufacturers and suppliers, passing the benefits on to Embassy Suites franchisees. However, HSM does not guarantee that every item sourced through its program will be cheaper or have better terms than what is available on the open market. HSM may also allow competitor hotels or their management companies to participate in these purchase arrangements to increase HSM's overall purchasing volume and bargaining power.
Embassy Suites franchisees are generally allowed to purchase furniture, fixtures, equipment, and other supplies from any source, provided that the established standards are met. However, Embassy Suites retains the right to require franchisees to purchase FF&E and supplies from approved suppliers in the future, or to mandate the purchase of specific brands or models of supplies or equipment available from only one source. In such cases, Embassy Suites may derive revenue from these purchases.