What section of the Embassy Suites agreement outlines the conditions for immediate termination by the franchisor?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
riod set forth in the notice, which shall not be less than ten (10) days;
- 13.1.2 You fail to commence or complete the Hotel Work by the applicable deadline date, including any extensions, or fail to open the Hotel on the Opening Date, and do not cure that default within the cure period set forth in the notice, which shall not be less than ten (10) days;
- 13.1.3 You do not purchase or maintain insurance required by this Agreement or do not reimburse us for our purchase of insurance on your behalf within the cure period set forth in the notice, which shall not be less than ten (10) days; or
- 13.1.4 You fail to comply with any other provision of this Agreement, the Manual or any Standard, or you breach a representation or warranty made in this Agreement, and you do not cure that default within the cure period set forth in the notice, which shall not be less than thirty (30) days.
- 13.2 Immediate Termination by Us. We may immediately terminate this Agreement on written notice to you and without any opportunity to cure the default if:
- 13.2.1 after curing any material breach of this Agreement or the Standards, you engage in the same non-compliance within any consecutive twenty-four (24) month period, whether or not the noncompliance is corrected after notice, which pattern of non-compliance in and of itself will be deemed material;
- 13.2.2 you receive three (3) notices of material default in any twelve (12) month period, even if the defaults have been cured;
- 13.2.3 you fail to pay debts as they become due or admit in writing your inability to pay your debts or you make a general assignment for the benefit of your creditors;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, section 13.2 outlines the conditions under which the franchisor can immediately terminate the franchise agreement. These conditions do not require Embassy Suites to provide the franchisee with an opportunity to correct the issue before termination.
Embassy Suites may terminate the agreement immediately if the franchisee repeats the same material breach within 24 months, even if the breach was previously corrected. Immediate termination can also occur if the franchisee receives three notices of material default within a 12-month period, regardless of whether the defaults were cured. Further, if the franchisee becomes insolvent, admits inability to pay debts, or enters bankruptcy, Embassy Suites reserves the right to immediate termination.
Other conditions that allow Embassy Suites to immediately terminate the agreement include loss of possession of the hotel, failure to operate the hotel for five consecutive days (unless due to Force Majeure), contesting the franchisor's ownership of the system, or termination of any hotel agreements due to a breach by the franchisee. These stipulations highlight the importance of maintaining operational and financial stability, as well as adherence to the franchise agreement terms, to avoid immediate termination and potential loss of the franchise.
These terms are stricter than some franchise agreements, which may allow a cure period for certain violations. A prospective Embassy Suites franchisee should carefully consider these conditions and ensure they have the resources and capabilities to meet the franchisor's standards to avoid potential termination.