How are Liquidated Damages calculated for an Embassy Suites franchise if the termination occurs after the second anniversary of the Opening Date but before the final 60 months of the Term?

According to Embassy Suites' 2025 Franchise Disclosure Document, the calculation of liquidated damages depends on when the franchise agreement is terminated. If the termination occurs after the second anniversary of the hotel's opening date, but before the final 60 months of the term, the franchisee must pay Embassy Suites an amount equal to the hotel's average monthly royalty fees multiplied by 60.

The "Hotel's Average Monthly Royalty Fees" is defined as the average of all monthly royalty fees due for the 24-month period preceding the month of termination, divided by 24. If the hotel has been operating for less than 24 months, the average is calculated using the period between the opening date and the termination date. Any temporary financial accommodations, such as fee discounts or waivers, are excluded from this calculation.

If a Business Interruption (defined as a period when a majority of guest rooms were out of service for 90 or more consecutive days) occurred during the 24-month measurement period, the months affected by the interruption are removed from the calculation, and the measurement period is extended by one month for each month of interruption. However, if this adjustment reduces the measurement period to less than 24 months, the average monthly royalty fees are calculated based on the entire operating period of the hotel.