What was the member's equity at the end of the year for the Embassy Suites franchise in 2022?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
05 | | 616,454 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 1,269,897 | $ | 1,183,147 |
See notes to financial statements.
Hilton Franchise Holding LLC Statements of Comprehensive Income and Member's Equity (in thousands)
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Revenues | |||
| Franchise royalty fees | $ 1,434,453 | $ 1,331,169 | $ 1,184,827 |
| Franchise sales and change of ownership fees | 49,340 | 43,294 | 39,881 |
| Franchise termination fees and other | 18,276 | 2,434 | 4,757 |
| Total revenues | 1,502,069 | 1,376,897 | 1,229,465 |
| Expenses | |||
| Operating expenses | 1,354 | 861 | 529 |
| Provision for (recovery of) credit losses | 6,248 | 4,430 | (2,483) |
| Amortization expense | 3,751 | 414 | 410 |
| Total expenses | 11,353 | 5,705 | (1,544) |
| Operating income | 1,490,716 | 1,371,192 | 1,231,009 |
| Non-operating income (loss), net | (2,733) | 1,217 | 2,503 |
| Income before taxes | 1,487,983 | 1,372,409 | 1,233,512 |
| Foreign tax expense | (412) | (128) | (70) |
| Net income | 1,487,571 | 1,372,281 | 1,233,442 |
| Other comprehensive income: | |||
| Currency translation adjustment | 28 | 1 | 6 |
| Total other comprehensive income | 28 | 1 | 6 |
| Comprehensive income | $ 1,487,599 | $ 1,372,282 | $ 1,233,448 |
| Member's equity, beginning of year(1) | $ 616,454 | $ 662,063 | $ 998,579 |
| Comprehensive income | 1,487,599 | 1,372,282 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the member's equity at the end of 2022 was $662,063. This figure represents the net worth of the Embassy Suites franchise business at the close of the fiscal year. It is calculated by subtracting total liabilities from total assets, reflecting the ownership stake of the member in the company. This number is significant because it provides a snapshot of the financial health and stability of the franchise at that time.
For a prospective franchisee, understanding the trend in member's equity over several years, as presented in the table, is crucial. The FDD shows the member's equity at the end of the year for 2024 ($577,005) and 2023 ($616,454) in addition to 2022. Reviewing these figures helps in assessing the financial trajectory of the franchise. A decreasing equity might signal potential challenges, while an increasing equity could indicate growth and profitability. However, it's important to consider the factors that influence these changes, such as comprehensive income and distributions to affiliates.
The statement also shows that the member's equity is affected by factors such as comprehensive income and distributions of retained earnings to Hilton affiliates. In 2022, the comprehensive income was $1,233,448, while distributions to Hilton affiliates amounted to $1,550,000. These transactions significantly impact the year-end member's equity. Understanding these related-party transactions and their effects on the financial statements is essential for a comprehensive financial analysis.
It is important to note that these figures are specific to the Embassy Suites franchise as a whole and not to individual franchise locations. Prospective franchisees should focus on understanding the overall financial performance of the franchise system as part of their due diligence. Consulting with a financial advisor to interpret these financial statements in the context of the franchise opportunity is highly recommended.