If Embassy Suites assigns the agreement to a third party, what happens to Embassy Suites' obligations to the franchisee?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.3 Exclusive Benefit. This Agreement is exclusively for our and your benefit, and none of the obligations of you or us in this Agreement will run to, or be enforceable by, any other party (except for any rights we assign or delegate to one of our Affiliates or covenants in favor of our Affiliates, which rights and covenants will run to and be enforceable by our Affiliates or their successors and assigns) or give rise to liability to a third party, except as otherwise specifically set forth in this Agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Embassy Suites Franchise Disclosure Document, the franchise agreement is exclusively for the benefit of both Embassy Suites and the franchisee. The agreement specifies that none of the obligations of either party are enforceable by any other party. However, there is an exception: Embassy Suites can assign or delegate rights to its affiliates, and those rights and associated covenants will then be enforceable by those affiliates or their successors.
This means that while third parties generally cannot enforce the franchise agreement, Embassy Suites retains the right to transfer its rights and obligations to its affiliates. If Embassy Suites assigns the agreement to an affiliate, that affiliate can then enforce the agreement against the franchisee. This is a common practice in franchising, allowing the franchisor flexibility in managing its business and potentially transferring operations or assets within its corporate structure.
For a prospective Embassy Suites franchisee, this clause highlights the importance of understanding the relationship between Embassy Suites and its affiliates. While the franchisee's primary contractual relationship is with Embassy Suites, the potential for assignment to an affiliate means that the franchisee may have to interact with or be subject to the directives of a different entity within the Embassy Suites network. It is important to investigate who these affiliates are and their potential role in the franchise system.