What is the process for Embassy Suites to transfer its rights or obligations under the franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2.2.1 Transferee submits a completed and signed Change of Ownership Application, pays our then-current franchise application fee, executes our then-current form of franchise agreement, and all required ancillary documents. If all conditions to our consent are fulfilled, the date of Closing will be the termination date of this Agreement, and the effective date of Transferee's franchise agreement;
12.2.2.2 you are not in default of this Agreement or any other agreements with
us or our Affiliates;
12.2.2.3 you or Transferee pay to us, on or before the date of Closing, the PIP Fee, and all amounts due to us and our Affiliates through the date of the Closing. We will estimate the amounts due to us through the date of Closing, which you and the Transferee may agree to escrow, to be disbursed to us at Closing to fulfill this obligation. You must agree to escrow the estimated amounts due to us if we agree to execute any documents pursuant to Standard Operating Procedure 50 10 5(I) (or any equivalent or successor) of the United States Small Business Administration in connection with a Closing. If our estimate of the amounts due to us exceeds the amount actually owed to us, we will refund the difference to you, generally within thirty (30) days after the date of Closing;
12.2.2.4 you conclude to our satisfaction, or provide adequate security for, any suit, action, or proceeding pending or threatened against you, us or any of our Affiliates with respect to the Hotel, which may result in liability on the part of us or any of our Affiliates;
12.2.2.5 you, Transferee and/or Equity Owner(s) of Transferee, submit to us all information related to the Transfer that we require;
12.2.2.6 Transferee meets our then-current business requirements for new
franchisees; and
12.2.2.7 Transferee agrees to indemnify, hold harmless, and defend us and our Affiliates against any inquiry, investigation, suit, action, or proceeding arising out of or in connection with any fees or costs charged to patrons or guests by you.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, the transfer of franchise rights involves several steps for both the franchisee and the potential transferee. The transferee must submit a completed Change of Ownership Application, pay the current franchise application fee, and execute the then-current form of the franchise agreement along with all required ancillary documents. If all conditions are met, the closing date of the transfer will be the termination date of the existing agreement and the effective date of the transferee's franchise agreement.
For the transfer to be approved, the franchisee must not be in default of the existing agreement or any other agreements with Embassy Suites or its affiliates. The franchisee or transferee must pay the PIP (Property Improvement Plan) Fee and all other amounts due to Embassy Suites and its affiliates through the closing date. Embassy Suites will estimate these amounts, and the franchisee and transferee may agree to escrow them for disbursement at closing. If an escrow is agreed to, and Embassy Suites's estimate exceeds the actual amount owed, the difference will be refunded to the franchisee within thirty days after closing.
Additional conditions include resolving any pending or threatened legal actions related to the hotel to Embassy Suites's satisfaction, or providing adequate security. Both the franchisee, the transferee, and any equity owners of the transferee must submit all required information related to the transfer. The transferee must meet Embassy Suites's current business requirements for new franchisees and agree to indemnify, hold harmless, and defend Embassy Suites and its affiliates against any claims arising from fees or costs charged to patrons or guests by the franchisee. These stipulations ensure that any transfer maintains the brand's standards and protects its interests.