What rights does Embassy Suites have regarding the description of the franchise agreement or the relationship between the franchisee and franchisor in a securities prospectus?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge that you have entered into this Agreement as a result of your own independent investigation and not as a result of any representations about us made by our shareholders, officers, directors, employees, agents, representatives, developers, independent contractors, or franchisees that are contrary to the terms set forth in this Agreement, or in any disclosure document, prospectus, or other similar document required or permitted to be given to you pursuant to applicable law.
However, nothing in this Section 16.4, this Agreement, or in any of Your Hotel Agreements is intended to disclaim the representations we made in any franchise disclosure document that we furnished to you.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Embassy Suites franchise agreement includes a clause addressing the franchisee's acknowledgment of independent investigation. Specifically, it states that franchisees enter the agreement based on their own investigation and not due to any representations made by Embassy Suites' shareholders, officers, directors, employees, agents, representatives, developers, independent contractors, or franchisees that contradict the terms of the agreement, any disclosure document, prospectus, or other similar document required or permitted by law. This clause emphasizes the franchisee's responsibility to conduct thorough due diligence. However, the agreement clarifies that this section does not disclaim any representations made by Embassy Suites in any franchise disclosure document furnished to the franchisee. This ensures that the franchisee can rely on the information provided in the FDD itself.
This provision is designed to protect Embassy Suites from liability based on unauthorized or inconsistent representations made by various parties associated with the brand. It reinforces the importance of the FDD as the primary source of information for prospective franchisees. By acknowledging their independent investigation, franchisees confirm that they are not solely relying on potentially inaccurate or misleading statements from other sources. This helps to mitigate potential disputes arising from misunderstandings or misinterpretations of the franchise opportunity.
For a prospective Embassy Suites franchisee, this clause highlights the need to conduct a comprehensive and independent investigation of the franchise opportunity. This includes carefully reviewing the FDD, consulting with legal and financial advisors, and conducting market research. While the franchisee can rely on the representations made by Embassy Suites in the FDD, they should not solely depend on information from other sources that may not be accurate or consistent with the official terms of the franchise agreement. This proactive approach can help ensure that the franchisee fully understands the risks and benefits of investing in an Embassy Suites franchise.