Can the software licensed to an Embassy Suites franchisee be transferred to another party?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.1.2 The Proprietary Software and Certified Third Party Software for which there is no separate license agreement are licensed or sublicensed to Customer under this Agreement on the following terms and conditions:
- a) The license is personal, non-exclusive and non-transferable.
- b) The Software may be used by Customer solely on the Authorized Equipment and solely for the operation of the Hotel.
- c) Except for a single copy of Certified Third Party Software which may be maintained by Customer for archival back-up purposes, Customer will not reproduce or reuse, in whole or in part, any Software, documentation or materials comprising any portion of the Information System in any manner (whether directly or in creating a new use or otherwise) without the prior written consent of HSS. Customer will not cause or permit any reverse engineering, disassembly or de-compilation of any of the Software or any review of Software data structures.
- d) Customer will accept all patches, bug fixes, updates, version upgrades, maintenance and service packs (collectively, "Patches") from HSS or the relevant Preferred Provider that are deemed necessary by HSS for the proper function and security of the Software. HSS is not responsible for performance or security issues that result from Customer's failure to accept the application of Patches.
- e) Customer recognizes the confidential and proprietary nature of the Software and agrees to maintain the Software in confidence in accordance with Article 6 (Confidentiality). Customer will not permit the Software and related documentation to be used or accessed by anyone other than Customer's employees or contractors pursuant to Section 2.1.2 (b) who are bound by obligations of confidentiality no less stringent than those set forth herein.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the software license granted to a franchisee is personal, non-exclusive, and explicitly non-transferable. This means an Embassy Suites franchisee cannot transfer the software license to another party. The software can only be used on authorized equipment and solely for the operation of the hotel.
This restriction has important implications for prospective Embassy Suites franchisees. If a franchisee sells their business or transfers ownership, the new owner cannot simply assume the existing software license. A new license agreement would need to be established with HSS, the licensor, or a preferred provider. This could involve additional costs and administrative procedures.
Furthermore, the franchisee is responsible for maintaining the confidentiality of the software and ensuring that only their employees or contractors, who are bound by confidentiality obligations, have access to it. This reinforces the non-transferable nature of the license, as it is tied to the specific franchisee and their operations. Any attempt to transfer or share the software with unauthorized parties would be a breach of the license agreement.
Embassy Suites also retains the right to make changes to or substitutions of the software at its discretion. Any new or additional software provided by Embassy Suites is also licensed under the same terms, further emphasizing the control Embassy Suites maintains over the software and its usage. This is a fairly standard practice in franchising, as franchisors need to maintain brand consistency and control over their systems.