If I sign an Embassy Suites Franchise Agreement, am I guaranteed a Restricted Area?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the standard Franchise Agreement does not guarantee a protected or exclusive territory. As stated in Item 12, the franchise agreement grants a non-exclusive license to operate a franchised hotel at a specific location during the term of the agreement. This means that as a franchisee, you may face competition from other franchisees, hotels owned by Embassy Suites's affiliates, or other competitive brands that Embassy Suites controls.
However, Embassy Suites may agree to provide a Restricted Area Provision, which offers specific territorial restrictions around the franchised hotel. This Restricted Area is intended to encompass the immediate competitive market for the hotel, as agreed upon by both parties. If granted, the Restricted Area Provision typically restricts Embassy Suites and its affiliates from operating or authorizing others to operate another Brand hotel within the Restricted Area during a specific Restrictive Period. The boundaries of a Restricted Area are not determined by a standard formula but depend on the market and competitive circumstances at the time the Franchise Agreement is signed. These boundaries can vary in size and shape and may be delineated by references to cities, streets, or distances from the hotel.
Even with a Restricted Area Provision, there are exclusions. The provision generally does not apply to hotels or motels already open, under construction, or approved for development as a Brand hotel before the agreement's effective date. It also excludes hotels under different brands, hotels that will operate under the Brand after the Restrictive Period expires, gaming-oriented hotels, shared ownership properties, and chains of four or more hotels acquired by Embassy Suites or its affiliates. Furthermore, the Restrictive Period is typically shorter than the full term of the Franchise Agreement and is often tied to a specific number of years from the Franchise Application approval date.
Embassy Suites retains the right to engage in business activities that may compete with your hotel, even within your Restricted Area, provided they observe any existing Restricted Area protections. They can also modify the System, use it in other businesses, and enter into strategic partnerships that may lead to competition. Prospective franchisees should be aware that the existence and terms of a Restricted Area Provision are subject to negotiation and are not guaranteed under the standard Franchise Agreement.