If Embassy Suites engages in activities that compete with my hotel, can I make claims for damages?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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If you will operate an eforea spa, you must open the spa by the date we specify, which will generally be within 12 months after the date you sign the Spa Amendment.
ITEM 12 TERRITORY
We grant franchisees a non-exclusive license to use the System during the term of the Franchise Agreement to operate a franchised hotel at a specified location. There are no provisions in the standard Franchise Agreement granting franchisees a protected area or territory. You will not receive an exclusive territory. You may face competition from other franchisees, from hotels that our affiliates own, or from other channels of distribution or competitive brands that we control. The standard Franchise Agreement permits us to own, operate, manage, franchise, license, lease, or affiliate or associate with any Other Business of any nature, whether in the lodging or hospitality industry or not, and whether under the Brand, a competitive brand, or otherwise, at any time and in any location. We and our affiliates have the right to engage in any Other Businesses, even if they compete with your Hotel, the Brand, System Hotels, or Network Hotels, and whether we or our affiliates start those businesses, or purchase, merge with, acquire, are acquired by, come under common ownership with, affiliate or associate with, such Other Businesses.
We may also: (a) modify the System by adding, altering, or deleting elements of the System; (b) use or license to others all or part of the System; (c) use the facilities, programs, services and/or personnel used in connection with the System in Other Businesses; and (d) use the System, the Brand, and the Marks in the Other Businesses. You acknowledge and agree that you have no
rights to, and will not make any claims or demands for, damages or other relief arising from or related to any of the foregoing activities, and you acknowledge and agree that such activities will not give rise to any liability on our part, including, but not limited to, liability for claims for unfair competition, breach of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty. "Other Businesses" means any business activity we or our affiliates engage in, other than the licensing of your Hotel.
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, franchisees acknowledge and agree that they cannot make claims or demands for damages or other relief arising from or related to Embassy Suites's competitive activities. This includes claims for unfair competition, breach of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty. Embassy Suites and its affiliates have the right to engage in any other businesses, even if they compete with your hotel. This includes starting new businesses, purchasing existing ones, merging, or affiliating with other businesses. These activities will not give rise to any liability on the part of Embassy Suites.
Embassy Suites grants franchisees a non-exclusive license to operate a franchised hotel at a specific location, and there are no provisions in the standard Franchise Agreement granting franchisees a protected area or territory. Franchisees may face competition from other franchisees, hotels that Embassy Suites's affiliates own, or other channels of distribution or competitive brands that Embassy Suites controls. Embassy Suites can own, operate, manage, franchise, license, lease, or affiliate with any other business, whether in the lodging or hospitality industry or not, under any brand, competitive or otherwise, at any time and in any location.
While a franchisee may be granted a Restricted Area Provision for a specific period, this does not provide complete protection. The Restricted Area Provision typically restricts Embassy Suites and its affiliates from operating or authorizing another Brand hotel within the Restricted Area during the Restrictive Period. However, this provision has exclusions, such as previously existing hotels, hotels under different brands, gaming-oriented hotels, and shared ownership properties. Furthermore, Embassy Suites may enter into strategic partnerships with third-party companies, allowing guests to make reservations and Hilton Honors members to receive benefits at these businesses, which may compete with the franchisee's hotel.
Prospective Embassy Suites franchisees should be aware that the franchise agreement does not offer a protected territory and explicitly states that franchisees cannot seek damages related to competitive activities by Embassy Suites. This lack of territorial protection and the waiver of damage claims represent significant risks for franchisees, as Embassy Suites can freely engage in activities that directly compete with their hotels. Franchisees should carefully consider these factors and evaluate the potential impact of competition from Embassy Suites and its affiliates before investing in a franchise.