What is the relationship between the 'Change of Ownership Transfer' and the 'Change of Ownership Application' for an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Change of Ownership Application" means the application that is submitted to us by you or the Transferee for a new franchise agreement in connection with a Change of Ownership Transfer.
- "Change of Ownership Transfer" means any proposed Transfer that results in a change of Control of Franchisee, the Hotel, or the Hotel Site and is not otherwise permitted by this Agreement, all as set out in Subsection 12.2.2.
12.2.2 Change of Ownership Transfer. A Change of Ownership Transfer is any Transfer that will result in a change of Control of you, the Hotel or the Hotel Site, or is not otherwise described in Subsection 12.2.1. We will have sixty (60) days from our receipt of the completed and signed franchise application to consent or withhold our consent to any proposed Change of Ownership Transfer. Our consent will not be unreasonably withheld. You consent to our communication with any third party we deem necessary about the Hotel in order for us to evaluate the proposed Change of Ownership Transfer. Our consent to the Change of Ownership Transfer is subject to the following conditions, all of which must be satisfied at or before the date of closing the Change of Ownership Transfer ("Closing"):
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;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, a 'Change of Ownership Transfer' is defined as any transfer that results in a change of control of the franchisee, the hotel, or the hotel site, as outlined in Subsection 12.2.2 of the franchise agreement. This excludes transfers otherwise permitted by the agreement. In connection with a Change of Ownership Transfer, either the current franchisee or the prospective new franchisee (referred to as the Transferee) must submit a 'Change of Ownership Application' to Embassy Suites.
The 'Change of Ownership Application' is the formal request for a new franchise agreement when a Change of Ownership Transfer is proposed. Embassy Suites has 60 days from receiving the completed application to either approve or deny the proposed transfer. Embassy Suites states that their consent will not be unreasonably withheld. As part of their evaluation, Embassy Suites may communicate with third parties about the hotel.
Several conditions must be met before Embassy Suites will approve a Change of Ownership Transfer. The Transferee must submit a completed and signed Change of Ownership Application, pay the current franchise application fee, and execute the then-current form of franchise agreement along with all required ancillary documents. The current franchisee must not be in default of the existing agreement or any other agreements with Embassy Suites or its affiliates. All outstanding amounts owed to Embassy Suites and its affiliates must be paid by the current franchisee or the Transferee. The Transferee must also meet Embassy Suites' then-current business requirements for new franchisees and agree to indemnify Embassy Suites and its affiliates against any claims arising from the current franchisee's operations.
In summary, the Change of Ownership Application is a necessary step to initiate and formalize the process of a Change of Ownership Transfer. The application allows Embassy Suites to assess the proposed transfer and ensure that all conditions are met before granting a new franchise agreement to the Transferee. The date the transfer closes will be the termination date of the current agreement and the effective date of the new franchise agreement with the Transferee.