What interest rate applies to unpaid Incentive amounts for an Embassy Suites franchise?

According to Embassy Suites's 2025 Franchise Disclosure Document, an Incentive, which is a financial contribution from Embassy Suites to assist with the development or conversion of a hotel, generally bears no interest. However, if an Incentive becomes repayable—such as when the franchise terminates before the end of its term or if the franchisee transfers the hotel—and the payment is not made in full when due, the outstanding amount is subject to interest.

The interest rate applied to the unpaid Incentive amount is 1.5% per month, or the highest rate allowed by law, whichever is applicable. This condition is important for prospective franchisees to understand, as failure to make timely payments on a repayable Incentive can result in significant additional costs. The Incentive is not a loan but a contingent liability, meaning it only becomes a debt under specific circumstances.

This interest rate is relatively high compared to typical loan interest rates, but it is applied only when the franchisee fails to meet the repayment obligations after the Incentive becomes due. Franchisees should ensure they have a clear understanding of the conditions under which the Incentive becomes repayable and factor this potential liability into their financial planning. It is also important to note that Embassy Suites may reduce the Incentive amount disbursed by any amount the franchisee owes to them or their affiliates, which does not affect the calculation of the repayable amount.