What is the total reduction of franchise royalty fees recognized for Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| (in thousands) | |
|---|---|
| Contract acquisition costs $ 376,063 $ (69,820) $ 306,243 | |
| Franchise contract intangible assets acquired 85,304 (3,317) 81,987 | |
| Costs to obtain contracts 7,259 (2,741) 4,518 | |
| $ 468,626 $ (75,878) $ 392,748 | |
| Contract acquisition costs $ 287,958 $ (54,374) $ 233,584 | |
| Costs to obtain contracts 7,256 (2,307) 4,949 | |
| $ 295,214 $ (56,681) $ 238,533 | |
| Recognized as a reduction of franchise royalty fees $ 16,053 $ 12,897 $ 11,972 |
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the recognized reduction of franchise royalty fees is detailed. Specifically, the amounts recognized as a reduction of franchise royalty fees are $16,053, $12,897, and $11,972. These figures likely represent different accounting periods or specific instances where royalty fees were reduced, potentially due to incentives, rebates, or other financial adjustments.
For a prospective Embassy Suites franchisee, understanding these reductions is crucial for financial planning. Reductions in royalty fees can significantly impact the profitability of the franchise, especially during the initial years of operation when cash flow might be tight. Franchisees should inquire about the conditions under which such reductions are granted and whether they can expect similar reductions during their franchise term.
It's also important to note that these reductions are distinct from amortization expenses, which are listed separately in the document. Amortization expenses relate to the allocation of the cost of intangible assets over time, while the reduction of franchise royalty fees directly affects the amount of royalties paid to Embassy Suites. Franchisees should carefully review the terms of their franchise agreement to understand how royalty fees are calculated and under what circumstances they might be reduced.
In summary, the reported reductions in franchise royalty fees represent a potential financial benefit for Embassy Suites franchisees. However, franchisees should conduct thorough due diligence to understand the specific terms and conditions governing these reductions and how they might impact their overall financial performance.