What does the term 'Affiliate' mean in the Embassy Suites Franchise Agreement?

According to Embassy Suites's 2025 Franchise Disclosure Document, the term 'Affiliate' is specifically defined within the context of the franchise agreement. It refers to any individual, firm, corporation, partnership, limited liability company, association, trust, or other entity that directly or indirectly controls, is controlled by, or is under common control with the entity in question. This definition is crucial for understanding the scope of various clauses within the agreement, particularly those pertaining to competition, transfer, and liability.

For a prospective Embassy Suites franchisee, this definition has several practical implications. For instance, if the franchisee is a corporation, the definition of 'Affiliate' would extend to any subsidiaries or parent companies under common control. This could impact the franchisee's ability to engage in other business ventures, especially those that might be considered competitive to the Embassy Suites brand. The agreement also specifies that Embassy Suites or its affiliates have the right to own, license, or operate any other business, even if they compete with the franchisee's hotel.

Furthermore, the definition of 'Affiliate' plays a role in transfer scenarios. If a franchisee seeks to transfer ownership, the transferee's affiliates will also be subject to scrutiny to ensure they meet Embassy Suites's business requirements and are not in default of any agreements with Embassy Suites or its affiliates. This ensures that any new ownership structure aligns with the brand's standards and protects Embassy Suites's interests. The franchisee must also ensure that their affiliates comply with the terms of the franchise agreement to avoid any potential breaches or complications.

In essence, the 'Affiliate' definition broadens the scope of the franchise agreement beyond the immediate franchisee to include any entities closely linked through control or ownership. This is a common practice in franchising to prevent franchisees from circumventing the agreement's provisions through related entities and to protect the integrity and consistency of the brand.