Regarding the HSS agreement for Embassy Suites, what constitutes 'Authorized Equipment'?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Additional Equipment/Software.
Any and all additional Authorized Equipment ("Standard Plus Equipment") may be purchased by Customer from a Preferred Provider.
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- Authorized Equipment Purchase. Customer may purchase the Authorized Equipment from the Preferred Provider who may provide a joinder agreement with Customer or from another retailer; however, if such Authorized Equipment is obtained from another retailer, it must conform to HSS's specifications. Furthermore, if Customer elects to purchase such Authorized Equipment from a third party other than the Preferred Provider, the file server and work stations must be shipped to HSS or its designee for certification that these components comply with HSS's specifications and testing procedures. Customer will also be responsible for the shipping and shipping related costs to and from HSS or its designee for such certifications.
- (a) Equipment License. HSS will provide for use by Customer at Customer's Hotel that portion of the Authorized Equipment needed, as determined solely by HSS, for the network operation of PEP as such equipment is more specifically described on Attachment (1) attached to and forming part of this TSP Agreement being hereinafter called the "Network Authorized Equipment," together with shipping and transportation costs on such equipment. HSS hereby licenses to Customer the use of such Network Authorized Equipment (the "Equipment License"), subject to the terms, conditions and limitations set forth in this TSP Agreement.
- (b) Equipment Installation. Customer will be responsible for the fees and costs for installation services relative to Network Authorized Equipment as well as any Standard Plus Equipment. Under the terms and conditions of the Total Solution Program's Refreshment Program (the "Refreshment Program") of Network Authorized Equipment, HSS anticipates that Network Authorized Equipment will be replaced or refreshed in HSS's sole discretion (the "Refresh"), on an approximate three (3) year cycle, starting approximately three (3) years after the initial shipment of Network Authorized Equipment. HSS will be responsible for the fees and costs for installation services of Network Authorized Equipment on the date that such equipment is refreshed under the Refreshment Program. Customer's Refresh will be timed to occur prior to the end of the three (3) year cycle. If Customer fails to meet HSS's timeline for such Refresh, including order dates for equipment and software, Customer will be responsible for all fees and costs incident to such delay, including, but not limited to, rent extension costs on Network Authorized Equipment and higher fees and costs for equipment maintenance and software maintenance.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, 'Authorized Equipment' under the HSS (Hilton Supply Management) agreement includes both 'Network Authorized Equipment' and 'Standard Plus Equipment'. Network Authorized Equipment is essential for the network operation of PEP (likely a technology platform), as determined solely by HSS. This equipment is described in Attachment (1) of the TSP Agreement and is provided for the franchisee's use at the hotel. HSS covers the shipping and transportation costs for this Network Authorized Equipment. The franchisee receives an Equipment License for this equipment, contingent upon fulfilling the HITS Agreement and other obligations under the TSP Agreement. HSS anticipates refreshing this equipment approximately every three years.
'Standard Plus Equipment' refers to any additional authorized equipment that the franchisee may purchase from a Preferred Provider. The franchisee is responsible for the fees and costs associated with installing both Network Authorized Equipment and Standard Plus Equipment. However, HSS is responsible for the installation fees and costs when refreshing the Network Authorized Equipment under the Refreshment Program. If the franchisee delays the Refresh, they may be responsible for additional costs, such as rent extension costs on Network Authorized Equipment and higher maintenance fees.
The franchisee has the option to purchase Authorized Equipment from a Preferred Provider or another retailer, but equipment from other retailers must meet HSS's specifications. If purchased from a third party, the file server and workstations must be shipped to HSS for certification to ensure compliance with HSS's standards and testing procedures, with the franchisee bearing the shipping costs. The Authorized Equipment remains personal property and does not become a fixture of the hotel. Until the franchisee fully pays for the equipment, it remains the property of the Preferred Provider. The franchisee must also maintain insurance on the Authorized Equipment, naming HSS as an additional insured, until full payment is made.