Under what circumstances can HSS terminate the Equipment License for an Embassy Suites location immediately?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
HSS may terminate the above Equipment License on the Network Authorized Equipment and all other obligations of HSS under this TSP Agreement at HSS's option: (a) Immediately without notice in event of breach of Customer's obligations or conditions set forth in Sections 2 and 3 above, or (b) at any time, with or without cause, upon not less than ninety (90) days advance written notice to Customer.
Any default by Customer under this TSP Agreement will constitute a default by Customer under the HITS Agreement, and, in such event, HSS may exercise any of its rights provided under the HITS Agreement.
Any default by Customer under the HITS Agreement will constitute a default and breach of condition by Customer under this TSP Agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, HSS can terminate the Equipment License immediately without notice if the franchisee breaches their obligations or violates the conditions outlined in Sections 2 and 3 of the TSP Agreement. These sections cover various aspects of the franchisee's responsibilities and the conditions under which the benefits of the TSP Agreement are provided.
Specifically, Section 3 lists several conditions that the Embassy Suites franchisee must meet to maintain the benefits and obligations of HSS under the TSP Agreement. These include not being in default of any agreement with HDOC, HSS, or their affiliates, including the TSP Agreement, the HITS Agreement, and the License Agreement. The franchisee must also continue to make all payments to HSS's Preferred Providers and ensure the hotel remains within specified Hilton Brand divisions. Furthermore, the franchisee must execute the HITS Agreement, participate in HSS's Total Solution Program, allow for the removal and refreshment of Network Authorized Equipment, and complete any required hotel conversion and rebranding.
Section 2, although not explicitly quoted, generally outlines the franchisee's obligations, and a breach of these obligations would also allow HSS to terminate the Equipment License immediately. This immediate termination clause underscores the importance of adhering to all contractual obligations and maintaining good standing with HSS and its affiliates. It also highlights the potential risk of losing the Equipment License and associated benefits if any of these conditions are not met, which could significantly impact the operation of the Embassy Suites franchise.