When selling securities, what must an Embassy Suites franchisee disclose to all purchasers and offerees regarding the franchisor's liability?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.3.4 You may not sell any Securities unless you clearly disclose to all purchasers and offerees that we, our Affiliates, and our or their respective officers, directors, agents or employees: (a) will not in any way be deemed an issuer or underwriter of the Securities, as those terms are defined in applicable securities laws; and (b) have not assumed and will not have any liability or responsibility for any financial statements, prospectuses or other financial information contained in any prospectus or similar written or oral communication. You may not state, represent, or imply that we, Hilton Worldwide, or any other of our Affiliates, participate in or endorse any Securities or any Securities offering in any manner whatsoever.
- 12.3.5 You must indemnify, defend and hold the Indemnified Parties free and harmless of and from any and all liabilities, costs, damages, claims or expenses arising out of or related to the sale or offer of any of your Securities to the same extent as provided in Subsection 14.1 of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, if a franchisee offers securities using the Embassy Suites marks or referencing the franchise agreement, they must disclose specific information to potential investors. The franchisee must clearly state that Embassy Suites, its affiliates, and their respective officers, directors, agents, or employees are not considered issuers or underwriters of these securities under applicable securities laws. This means Embassy Suites is not responsible for the securities offering.
Furthermore, the franchisee must disclose that Embassy Suites has not assumed and will not have any liability or responsibility for any financial statements, prospectuses, or other financial information provided in connection with the securities offering. This protects Embassy Suites from being held accountable for the financial information presented to investors by the franchisee. The franchisee is also prohibited from implying that Embassy Suites or its affiliates participate in or endorse the securities offering in any way.
In addition to these disclosures, the Embassy Suites franchisee is required to indemnify, defend, and hold harmless Embassy Suites and its affiliates from any liabilities, costs, damages, claims, or expenses arising from the sale or offer of the franchisee's securities. This indemnification clause ensures that the franchisee bears the full responsibility for any issues related to the securities offering, further shielding Embassy Suites from potential legal or financial repercussions.