Is Embassy Suites obligated to participate in a franchisee's defense or indemnify them for copyright infringement damages?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You must promptly notify us, in writing, when you learn of any unauthorized use of our Proprietary Information. We will respond as we think appropriate. We are not, however, obligated to participate in your defense or indemnify you for damages or expenses if you are a party to a proceeding involving the copyright on the Manual.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 72–74)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites is not obligated to participate in a franchisee's defense or indemnify them for damages or expenses if the franchisee is involved in a legal proceeding regarding the copyright on the Manual. The Manual contains the standards, requirements, recommended practices, and procedures for the System Hotel operations. Embassy Suites and HIH claim copyrights to the information within the manual, considering it proprietary.
This means that if an Embassy Suites franchisee faces a copyright infringement claim related to the use of the Manual, they will be responsible for their own legal defense and any associated costs or damages. This is a significant risk for franchisees, as copyright litigation can be expensive and time-consuming.
It is common practice in franchising for franchisors to provide some level of support or indemnification to franchisees in intellectual property matters, particularly when the franchisee is using the franchisor's approved materials and systems. However, in this case, Embassy Suites explicitly excludes any obligation to defend or indemnify franchisees in copyright disputes related to the Manual. Prospective franchisees should carefully consider this risk and potentially seek legal counsel to understand their exposure and options for mitigating this risk, such as obtaining their own insurance coverage. Franchisees should also ensure they adhere strictly to the guidelines in the Manual to minimize the risk of copyright infringement.