What is the 'Shared Facilities Arrangement' that Embassy Suites refers to?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
t or the [Hotel #2] Agreement is terminated for any reason;
- d) You Transfer a controlling Equity Interest in you, the Hotel Site, or the Agreement, without simultaneously selling, leasing, assigning, or Transferring a controlling Equity Interest in you (or your Affiliate controlling [Hotel #2] Hotel), the [Hotel #2] Hotel Site, or the [Hotel #2] Agreement, to the same transferee or a transferee under common control with such transferee. Any Transfers are subject to the Transfer provisions of the Agreement. Failure to comply with the Transfer provisions is a material breach of the Agreement.
If we withdraw our consent pursuant to this paragraph, to the extent that the Shared Facilities are part of Standards, you shall immediately make arrangements to either procure the Shared Facilities, or to construct comparable facilities and amenities, for the exclusive use of the Hotel. Your failure to procure the Shared Facilities or construct comparable facilities and amenities to meet Standards is deemed to be a default that may result in the termination of the Agreement. If the Shared Facilities are no longer a part of the Hotel, you are responsible for immediately removing any Marks or distinctive System features associated with the Brand from any of the Shared Facilities that are accessible to or visible by Hotel guests, and removing all other indicia that the Hotel had joint possession or use of the Shared Facilities with the [Hotel #2] Hotel.
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- So long as the Shared Facilities Arrangement is in place, any new franchise agreement executed in connection with a Transfer, or any successor franchise agreement executed between you and us must contain the provisions set forth in this Addendum. You acknowledge and agree that your refusal to include these restrictions in a successor franchise agreement will constitute a valid and reasonable basis for us to refuse to grant such successor franchise agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, the 'Shared Facilities Arrangement' involves the hotel sharing facilities with another hotel, referred to as '[Hotel #2].' This arrangement is governed by a 'Shared Facilities Addendum' to the Franchise Agreement, indicating it's a specific, documented agreement. The FDD stipulates that if this arrangement is in place, any new or successor franchise agreements must include the provisions outlined in the addendum. Refusal to do so can be a valid reason for Embassy Suites to deny a successor agreement or a transfer of ownership.
If Embassy Suites withdraws consent for the shared facilities, the franchisee must either procure the shared facilities independently or construct comparable facilities exclusively for the hotel's use. Failure to meet these standards can result in default and potential termination of the agreement. Furthermore, if the facilities are no longer shared, the franchisee is responsible for removing any branding or features that indicate joint use.
Additionally, a default under the agreement with '[Hotel #2]' constitutes a simultaneous default of the Embassy Suites Franchise Agreement, and the termination of the '[Hotel #2]' agreement can lead to the termination of the Embassy Suites agreement. This highlights the interconnectedness and potential risks associated with shared facilities arrangements. Prospective franchisees should carefully review the Shared Facilities Addendum and understand the obligations and potential consequences tied to this arrangement.