Can Embassy Suites increase or decrease the Maintenance Fees at their discretion?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
HSS reserves the right to increase or decrease the Proprietary Software Maintenance cost on an annual basis to reflect increases or decreases in such costs and the addition or construction of additional guest rooms (or suites) by Customer for Customer's Hotel.
The Maintenance Fees are subject to increase or decrease by HSS, in its sole discretion, on January 1 of each year during the term of this Agreement or any extension thereof; however, HSS will not charge Customer any Maintenance Fees that are greater than the Maintenance Fees charged to any similarly situated Customer (based upon factors determined by HSS in its sole judgment) utilizing equipment substantially similar to the Authorized Equipment and pursuant to an agreement which has terms and conditions substantially similar to this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, HSS, which appears to be a provider of software and equipment, has the discretion to adjust maintenance fees. Specifically, HSS can increase or decrease the Proprietary Software Maintenance cost annually to reflect changes in their costs or if the franchisee adds guest rooms or suites to their hotel. Additionally, HSS can modify the Maintenance Fees on January 1 of each year during the agreement or any extensions. However, these Maintenance Fees cannot exceed what is charged to similarly situated customers using substantially similar equipment and agreements.
This policy has several implications for prospective Embassy Suites franchisees. Franchisees should anticipate potential fluctuations in their maintenance expenses, which could impact their overall operating costs. The adjustments are tied to factors like HSS's internal costs and any expansion of the hotel, providing some transparency into the reasons behind the changes. The assurance that fees will not exceed those charged to comparable franchisees offers a degree of protection against arbitrary pricing.
It's important to note that these adjustments pertain to Proprietary Software Maintenance and Equipment Maintenance provided by HSS or its Preferred Providers. Franchisees might also incur separate costs for additional services or updates to the software, as well as for the replacement or refreshment of Authorized Equipment. Understanding the full scope of potential maintenance-related expenses is crucial for accurate financial planning.
Prospective franchisees should carefully review the terms and conditions outlined in Schedule B-2 of the Franchise Agreement, which governs Authorized Equipment Maintenance and Refresh. They should also inquire about the specific factors HSS uses to determine 'similarly situated customers' to fully understand how their fees will be assessed and adjusted over time. This due diligence will help franchisees anticipate and manage their maintenance costs effectively throughout the franchise term.