Are there any exclusions to the Restricted Area Provision for an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
litical subdivisions, references to streets or highways, or references to an area encompassed within a radius of specified distance from the front door of the hotel.
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- Restricted Area Provision. The Restricted Area Provision will typically restrict us and our affiliates from operating, or authorizing someone else to operate, another Brand hotel during the Restrictive Period and within the Restricted Area (except as described in Paragraph 3 below). In the Restricted Area Provision, the term 'Brand' means the name used to identify the chain of hotels operated under the same Chain Code and Standards. It excludes any other brands or product lines containing "Embassy" in the name. It also excludes Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word "Hilton" as part of their brand name (such as "Hilton Garden Inn," "DoubleTree by Hilton" or "Homewood Suites by Hilton").
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- Exclusions from the Restricted Area Provision: The Restricted Area Provision will generally not apply to: (a) any hotel or motel that is currently open or under construction or has been approved for development or opening as a Brand hotel as of the Effective Date, or any hotel located or to be located within the Restricted Area that replaces such hotel under the Brand; (b) hotels or motels under brands other than the Brand; (c) hotels or motels that will not begin operating under the Brand until after the expiration of the Restrictive Period; (d) gaming-oriented hotels or facilities using the Brand; (e) shared ownership properties (commonly known as "vacation ownership" or "time share ownership" or similar real estate properties) under the Brand; and (f) any hotels, motels, or inns that are part of a chain or group of four (4) or more hotels, motels, or inns that we or our Affiliates, as a result of a single transaction or group of related transactions, own, operate, acquire, lease, manage, franchise, license, or join through a merger, acquisition or marketing agreement (or otherwise), whether under their existing name or the Brand name or any other name.
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- Restrictive Period. The Restrictive Period will normally be for an agreed-on time period. Generally, this period will be shorter than the term of the Franchise Agreement, usually
tied to a specified number of years from the date your Franchise Application was approved. In some cases, the Restrictive Period may reduce in geographic scope after an agreed-on time period. The continuation of the Restrictive Period will not depend on your achieving any particular sales volume or market penetration. An increase in population in the Restricted Area will not affect it and there are no other circumstances when your Restricted Area may be altered. Historically, we have extended the Restrictive Period for the full term of the Franchise Agreement; however, we do not intend to do so in the future. Those restrictions as to entities other than us may lapse if the Brand is no longer affiliated with Hilton Worldwide.
IMPORTANT NOTES: A Restricted Area Provision will not give you protection from previously existing hotels which are managed or licensed by us or an affiliate or our or their predecessors, or any hotel site for which we or an affiliate or its predecessor have approved an application and/or signed a franchise agreement, management agreement, lease or license agreement for a System Hotel to be developed. In addition, a Restricted Area Provision will not give you protection from any replacement hotel that replaces or will replace another such existing hotel or hotel site. SOME STATE AND/OR OTHER LAWS PROVIDE THAT TERRITORIAL AND/OR AREA RESTRICTIONS ARE VOID, VOIDABLE AND/OR SUPERSEDED BY LAW.
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, there are several exclusions to the Restricted Area Provision. The term 'Brand' in the Restricted Area Provision excludes any other brands or product lines containing "Embassy" in the name. It also excludes Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word "Hilton" as part of their brand name, such as "Hilton Garden Inn," "DoubleTree by Hilton" or "Homewood Suites by Hilton".
Specifically, the Restricted Area Provision generally does not apply to: (a) any hotel or motel that is currently open or under construction or has been approved for development or opening as a Brand hotel as of the Effective Date, or any hotel located or to be located within the Restricted Area that replaces such hotel under the Brand; (b) hotels or motels under brands other than the Brand; (c) hotels or motels that will not begin operating under the Brand until after the expiration of the Restrictive Period; (d) gaming-oriented hotels or facilities using the Brand; (e) shared ownership properties (commonly known as "vacation ownership" or "time share ownership" or similar real estate properties) under the Brand; and (f) any hotels, motels, or inns that are part of a chain or group of four (4) or more hotels, motels, or inns that Embassy Suites or its Affiliates, as a result of a single transaction or group of related transactions, own, operate, acquire, lease, manage, franchise, license, or join through a merger, acquisition or marketing agreement (or otherwise), whether under their existing name or the Brand name or any other name.
Additionally, the Restricted Area Provision will not protect franchisees from previously existing hotels managed or licensed by Embassy Suites or its affiliates, or any hotel site for which they have approved an application and/or signed an agreement. It also does not protect from any replacement hotel that replaces another existing hotel or hotel site. These exclusions mean that while Embassy Suites may grant a Restricted Area, its protections are limited and subject to numerous exceptions, potentially impacting a franchisee's competitive advantage within their area.
Embassy Suites and its affiliates may also furnish services, products, advice, and support to competitive guest lodging businesses or any other businesses, facilities, networks, properties or concepts located anywhere, at any time, including in a franchisee's Restricted Area. They may also be sold to or otherwise acquired by an existing competitor or newly formed entity which itself has established or may establish competitive guest lodging businesses or any other businesses located anywhere, at any time, provided that the franchisee's Restricted Area protections, if any, will be observed. Furthermore, Embassy Suites and its affiliates may purchase, merge, acquire, or affiliate in any other way with any franchised or non-franchised network or chain of guest lodging businesses or any other business regardless of the location of that business, network, chain, or other business's facilities, including within a franchisee's Restricted Area, and that following such activity they may own, operate, manage, franchise, license, or lease those other facilities under any brands or marks anywhere, at any time, regardless of the location of those businesses or facilities, provided that the franchisee's Restricted Area protections, if any, will be observed. There is no mechanism for resolving any conflicts that may arise between a franchisee's Hotel and other hotels or businesses described in this paragraph.