What is the termination fee for Embassy Suites if the agreement is terminated during the third year?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
During second year $2,600 During third year $1,300 Thereafter $1,200
Provided, however, if this TSP Agreement is terminated, or if the Customer's use of the Preferred Provider is terminated after a Customer Refresh of Network Authorized Equipment, the termination fee will depend upon the period elapsed after the Start Date applicable to shipment of the Network Authorized Equipment for each successive Customer Refresh as follows:
During first year $3,800 During second year $2,800 During third year $1,400 Thereafter $1,200
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the termination fee for the TSP Agreement varies depending on when the termination occurs. Specifically, if the TSP Agreement is terminated during the third year following the shipment date of the Network Authorized Equipment to the franchisee's hotel (referred to as the "Start Date"), the termination fee is $1,300.
This fee is designed to reimburse the Preferred Provider and/or HSS (presumably Hilton Supply Management Services) for unamortized or otherwise uncovered costs. These costs include expenses related to Certified Third Party Software and the initial setup and provision of maintenance services by the Preferred Provider under the HITS Agreement.
However, there is a different termination fee schedule if the termination occurs after a Customer Refresh of Network Authorized Equipment. In this case, the termination fee also depends on the period elapsed after the Start Date applicable to the shipment of such Authorized Equipment for each successive Customer Refresh. The fee is $1,400 if termination occurs during the third year after the refresh. It is important for a prospective franchisee to understand which termination fee schedule applies to their specific situation, as the fees can vary.