Can Embassy Suites license parts of the System to others?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites retains the right to license parts of its System to others. Specifically, Embassy Suites may modify the System by adding, altering, or deleting elements, and they can use or license all or part of the System to other entities. This also extends to using the facilities, programs, services, and personnel associated with the System in other businesses. Furthermore, Embassy Suites can use the Brand and Marks in these other businesses.
This broad right has significant implications for prospective franchisees. It means that Embassy Suites has the flexibility to adapt and evolve its System, potentially in ways that could impact a franchisee's business. While this could lead to improvements or innovations, it also carries the risk that changes to the System might not always benefit individual franchisees. The ability to license parts of the System to others also means that elements of the Embassy Suites model could be adopted by other businesses, potentially increasing competition or diluting the brand's uniqueness.
Embassy Suites's right to license aspects of its system is balanced by the fact that franchisees acknowledge they have no rights to make claims or demands for damages related to these activities. This includes claims for unfair competition or breach of contract. This underscores the importance of understanding the full scope of Embassy Suites's rights and the limitations on a franchisee's recourse before investing in a franchise. Prospective franchisees should carefully consider how these provisions might affect their business and seek legal counsel to fully understand their rights and obligations.
While Embassy Suites retains broad rights over its System, franchisees may be able to negotiate a Restricted Area Provision. This provision, if granted, could offer some territorial protection by restricting Embassy Suites and its affiliates from operating or authorizing another Brand hotel within a defined area and time period. However, these restrictions have several exclusions and limitations, such as not applying to existing hotels or those under different brands. Therefore, franchisees should carefully evaluate the scope and limitations of any Restricted Area Provision to understand the actual level of protection it offers.