Does Embassy Suites provide material benefits based on the use of designated or permitted sources?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as stated above, we do not negotiate purchase arrangements with suppliers for the benefit of franchisees. There are no purchasing or distribution cooperatives. We provide you with no material benefits (such as license renewal or the grant of additional licenses) based on your use of designated or permitted sources (the Franchise Agreement is non-renewable). Except as described above, we presently receive no payments, discounts, rebates, credits or commissions from any supplier based on your purchases from that supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 45–50)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites does not provide franchisees with material benefits, such as license renewal or the grant of additional licenses, based on their use of designated or permitted sources. The document specifies that the Franchise Agreement is non-renewable, meaning that a franchisee's choice of suppliers does not influence their ability to renew their franchise.
Embassy Suites may develop promotional programs with third-party companies, potentially requiring franchisees to purchase and use certain related equipment and supplies from designated approved suppliers. In these instances, Embassy Suites and its affiliates may receive fees, rebates, and other revenues from franchisee purchases related to these promotional programs. This creates a financial incentive for Embassy Suites to encourage the use of specific suppliers, although it does not directly translate into material benefits for the franchisee like license renewal.
While franchisees are generally allowed to purchase furniture, fixtures, and equipment from any source that meets Embassy Suites' standards, there is a possibility that Embassy Suites may require franchisees to purchase from an approved supplier in the future. They may also require the purchase of a particular brand or model of supplies or equipment available from only one source, and Embassy Suites may derive revenue from these purchases. This potential future scenario does not currently provide material benefits to franchisees but could impact their purchasing decisions and costs.
Embassy Suites uses a subsidiary, HSM, to negotiate with third-party manufacturers and suppliers for various hotel items. While franchisees are not obligated to purchase from HSM, the aim is to secure lower prices and preferred terms, which are then passed on to the franchisees. However, HSM does not guarantee lower costs or better terms than those available elsewhere in the market. This arrangement is designed to benefit franchisees through potential cost savings, but it does not constitute a material benefit tied directly to the use of designated sources in the form of license renewal or additional licenses.