For Embassy Suites, does the restriction on opening Restricted Brands apply to shared ownership properties (commonly known as 'vacation ownership' or 'time share ownership' or similar real estate properties) under the Restricted Brands?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
This restriction does not apply to any hotel or motel that is currently open or under construction or has been approved for development or opening as a Restricted Brands hotel as of the Effective Date ("Existing Hotel"). The term Existing Hotel also includes any hotel located or to be located within the Restricted Area that replaces such Existing Hotel under the Restricted Brands. The restrictions also do not apply to any: (1) hotel(s) or motel(s) under brands other than the Restricted Brands; (2) hotel(s) or motel(s) that will not begin operating under the Restricted Brands until after the expiration of the Restrictive Period; (3) gaming-oriented hotels or facilities using the Restricted Brands; (4) shared ownership properties (commonly known as "vacation ownership" or "time share ownership" or similar real estate properties) under the Restricted Brands; and (5) hotel(s), motel(s), or inn(s) that are part of a chain or group of four (4) or more hotels, motels, or inns that we or our Affiliates, as a result of a single transaction or group of related transactions, own, operate, acquire, lease, manage, franchise, license, or join through a merger, acquisition or marketing agreement (or otherwise), whether under their existing name or the Restricted Brands name or any other name.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the restriction on opening hotels or motels under the "Restricted Brands" does not apply to shared ownership properties (commonly known as "vacation ownership" or "time share ownership") under the Restricted Brands. This means that Embassy Suites, or its affiliates, are not restricted from opening or allowing to open a shared ownership property under the Restricted Brands, even within the defined restrictive period and area.
This exception to the restriction could be beneficial for Embassy Suites as it allows for flexibility in developing different types of lodging options under the Restricted Brands. It also means that a franchisee will not be able to prevent Embassy Suites from opening a timeshare property under one of the restricted brands near their franchised location.
It is important for a prospective franchisee to understand the implications of this exception, as it could impact the competitive landscape of their specific market. While the franchisee may have some protection against traditional hotels or motels under the Restricted Brands, this protection does not extend to shared ownership properties. Franchisees should consider this when evaluating the potential for competition within their protected area.