What is the relationship between the initial fees for an Embassy Suites franchise in Item 5 and the potential for development incentives offered to Embassy Suites franchisees as described in Item 10?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
f those additional rooms/suites were part of your original Franchise Application.
While the Franchise Application Fee is usually applied uniformly, we may elect to reduce it after considering criteria which may include: incentives for the development of hotels within the System, a hotel's market position, the property size and the number of hotels in the System operated by a franchisee. In limited and unique circumstances, we may waive part of the Franchise Application Fee or negotiate the Franchise Application Fee for franchisees with whom we have previously dealt but we are not obligated to do so, even for franchisees possessing these characteristics. In 2024, franchis
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the Franchise Application Fee, detailed in Item 5, can be influenced by development incentives, as mentioned in Item 10. While the Franchise Application Fee is generally applied uniformly, Embassy Suites may elect to reduce it based on criteria such as incentives for hotel development within the System. This indicates that the initial fees can be lower if the franchisee qualifies for development incentives. For a New Development or Conversion, the Franchise Application Fee is $100,000, plus $400 for each additional guest room or suite over 250. For a Change of Ownership, the Franchise Application Fee is $200,000.
Specifically, Item 10 states that Embassy Suites may offer incentives for new hotels, which are financial contributions to assist with the development or conversion of a hotel. These incentives are subject to a development incentive note. The incentive will be disbursed within 30 days after the hotel opens with Embassy Suites's consent, provided certain conditions are met, including no material adverse changes in the business, completion of any required Property Improvement Plan (PIP), and payment of the Franchise Application Fee.
In 2024, franchisees paid Franchise Application Fees ranging from $7,500 to $200,000 for Change of Ownership. This range suggests that the actual fee can vary significantly, and the availability of development incentives could be a factor in determining the final amount. Prospective franchisees should inquire about the specific criteria and conditions for obtaining development incentives and how these incentives might affect the Franchise Application Fee.