If an Embassy Suites franchisee is permitted to share their business operation or engage in a tenant-in-common syndication or transfer, must they comply with any terms required by the franchisor?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not share the business operations and your Hotel facilities with any other hotel, inn, conference center, lodging facility or similar business without our express permission, which we may withhold for any reason. If we permit your Hotel to share facilities with another hotel in our Network (which is also franchised or managed by us or any of our Affiliates), then you must sign the Shared Facilities Addendum to the Franchise Agreement, shown in Exhibit D to this Disclosure Document. You are not allowed to engage in any tenant-in-common syndication or transfer of any tenant-in-common interest in the hotel or the hotel site, other than a Transfer that is otherwise a Permitted Transfer, without our express permission, which we may withhold for any reason. If we permit you to share your business operation or engage in a tenant-in-common syndication or transfer, you must comply with any terms that we require as a condition to our approval.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 75–77)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, franchisees must adhere to specific terms set by Embassy Suites if they are permitted to share their business operations or engage in a tenant-in-common syndication or transfer. This means that even if Embassy Suites grants permission for these activities, the franchisee's freedom is not absolute.
Embassy Suites retains the right to impose conditions on its approval, and the franchisee is obligated to comply with these terms. This provision allows Embassy Suites to maintain control over how its brand and business model are represented and managed, even when the franchisee seeks to share operations or engage in complex financial arrangements.
For a prospective Embassy Suites franchisee, this underscores the importance of understanding all potential conditions and restrictions before entering into any agreements to share business operations or engage in tenant-in-common syndications. It would be prudent to seek clarity from Embassy Suites regarding the types of terms that might be imposed and to carefully evaluate whether those terms are acceptable and feasible for their business plans.