What is the relationship between an 'Affiliate' and the subject entity in the Embassy Suites Franchise Agreement?

According to the 2025 Embassy Suites Franchise Disclosure Document, an 'Affiliate' is defined as any entity that directly or indirectly controls, is controlled by, or is under common control with the subject entity. This broad definition encompasses various types of entities, including individuals, firms, corporations, partnerships, limited liability companies, associations, and trusts.

For a prospective Embassy Suites franchisee, this definition is important because it clarifies the scope of relationships that could have implications under the Franchise Agreement. For example, the agreement addresses situations where transfers to affiliates are permitted. It also affects the enforcement of the agreement, as Embassy Suites can assign rights or delegate obligations to its affiliates, making those rights and covenants enforceable by the affiliates.

Moreover, the definition of 'Affiliate' plays a role in determining what constitutes a 'Competitor.' An entity is considered a competitor if it owns, licenses, or franchises a competing hotel brand, either directly or through an affiliate. However, there are exceptions for franchisees of competing brands, managers of competing brand hotels (under certain conditions), and those with minority interests in competing brands, provided they do not exercise control over the competing brand's business decisions. This distinction is crucial for franchisees to understand potential conflicts of interest and restrictions on their activities during the term of the franchise agreement.