Under what circumstances related to transfer of interest can the Embassy Suites Franchise Agreement be terminated?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement (“FA”), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| FA §13.2 (10) | you Transfer any interest that is not in compliance with the Franchise Agreement; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, the Franchise Agreement can be terminated if the franchisee transfers any interest in a way that does not comply with the agreement.
The Franchise Agreement outlines specific conditions for transfers, dividing them into Permitted Transfers and Change of Ownership Transfers. A transfer of any interest in the franchisee, the Hotel, the Hotel Site, or the Franchise Agreement is prohibited unless expressly allowed in the Franchise Agreement. Permitted Transfers are those that do not result in a change of control of the franchisee, the Hotel, or the Hotel Site. Certain types of Permitted Transfers, such as transfers of Publicly Traded Equity Interests, privately held Equity Interests under 50% without a change of control, and interests within designated institutional investment funds (if the asset manager remains the same), can be completed without notice to or consent from Embassy Suites.
For other Permitted Transfers, the franchisee must provide 60 days' written notice and obtain Embassy Suites' consent, adhering to their current transfer requirements, unless the transfer qualifies under the exceptions mentioned above. In any transfer, the proposed transferee cannot be a Sanctioned Person or a Competitor.
This means that franchisees must be very careful to follow the specific transfer rules outlined in the Franchise Agreement. Failure to do so gives Embassy Suites the right to terminate the agreement.