Can Embassy Suites reduce payments to a franchisee if the franchisee owes money to Embassy Suites' affiliates?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We can require you to transmit all payments required under the Franchise Agreement by wire transfer or other form of electronic funds transfer. You must bear all costs of wire transfer or other form of electronic funds transfer. We may reduce the amount of any payment or credit to you by any amount that you owe us, and this includes your and our affiliates.
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, Embassy Suites has the right to reduce the amount of any payment or credit due to a franchisee by any amount that the franchisee owes to them or their affiliates. This means that if an Embassy Suites franchisee owes money to Embassy Suites itself, or to any of Embassy Suites' affiliated companies, Embassy Suites can offset these debts by reducing payments that would otherwise be made to the franchisee.
This policy has significant implications for prospective franchisees. It creates a financial взаимосвязь between the franchisee and Embassy Suites, as well as its affiliates. If a franchisee incurs debt with Embassy Suites or its affiliates, it could directly impact the franchisee's cash flow, as Embassy Suites can reduce payments to recoup those debts. This could affect the franchisee's ability to manage their finances and potentially impact their profitability.
It is important for prospective Embassy Suites franchisees to carefully consider this offset policy and its potential impact on their financial stability. Franchisees should ensure they understand the terms and conditions of any agreements with Embassy Suites and its affiliates that could create a debt situation. Understanding these financial obligations is crucial for managing cash flow and maintaining a healthy financial relationship with the franchisor and its related entities.