How is the repayable amount of the Embassy Suites Incentive reduced over time?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
er the Note. In that case we may require the transferee to provide us with such additional security as we deem appropriate. The repayable amount of the Incentive decreases over time. For each year that the Hotel is open, the repayable amount is reduced by an equal annual percentage of the Term. For example, if the franchise has a 10-year Term, the repayable amount is reduced by 1/10th of the original amount annually. If the franchise has a 20-year term, the repayable amount is reduced by 1/20th of the original amount
annually. An Incentive bears no interest.
Source: Item 10 — FINANCING (FDD pages 52–53)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the repayable amount of the Incentive decreases over the term of the franchise agreement. The FDD specifies that for each year the hotel is open, the repayable amount is reduced by an equal annual percentage of the term.
For example, if an Embassy Suites franchise agreement has a 10-year term, the repayable amount of the incentive is reduced by 1/10th (or 10%) of the original amount each year. Similarly, if the franchise term is 20 years, the repayable amount is reduced by 1/20th (or 5%) of the original amount annually. This means that the longer an Embassy Suites franchisee operates the hotel, the less of the incentive they would have to repay if the franchise terminates early or if the hotel is transferred.
This incentive structure benefits franchisees by reducing their financial liability over time. It also encourages franchisees to maintain the franchise and operate the hotel successfully for the entire term of the agreement. The incentive bears no interest unless it becomes repayable and payment is not made when due, at which point the outstanding amount is subject to interest at 1.5% per month or the highest rate allowed by law.