Under what circumstances can Embassy Suites terminate the franchise agreement immediately?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
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- You acknowledge and agree that any Default under the [Hotel #2] Agreement shall constitute a simultaneous Default of the Agreement, and termination of the [Hotel #2] Agreement pursuant to such Default shall constitute a valid basis for termination of the Agreement.
13.5.1 within twelve (12) months of each other, [SELECT FOR CI, DT, ES, GU, HFS, OL, PY, QQ: two (2)] [SELECT FOR EY, HGI, H2, HWS, PO, UP: five (5)] [SELECT FOR HAM, HIS, PE, RU, UAB: seven (7)] or more franchise agreements for the Brand between yourself (or any of your Affiliates) and us (or any of our Affiliates) terminate before their expiration date as a result of a breach by you or your Affiliate; or
13.5.2 this Agreement terminates due to an unapproved Transfer: (a) to a Competitor, or (b) to a buyer that converts the Hotel to a Competing Brand within two (2) years from the date this Agreement terminates.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, there are specific instances that could lead to the immediate termination of the franchise agreement. One such instance involves the termination of a specified agreement related to a hotel, referred to as the "[Hotel #2] Agreement." If this agreement is terminated due to a default, it automatically constitutes a default under the Embassy Suites franchise agreement, providing grounds for its termination. This highlights the interconnectedness of agreements when an Embassy Suites franchise shares facilities with another hotel.
Another cause for immediate termination arises if, within a 12-month period, a certain number of franchise agreements for the brand are terminated due to a breach by the franchisee or their affiliates. The specific number of agreements varies depending on the Embassy Suites brand, with two agreements for some brands and up to seven for others. This provision indicates that a pattern of breaches across multiple franchise agreements within a short timeframe can trigger immediate termination.
Furthermore, the agreement can be terminated immediately if there is an unapproved transfer of the franchise to a competitor or to a buyer who converts the hotel to a competing brand within two years of the termination date. This clause underscores Embassy Suites's concern about protecting its brand and market position by preventing franchisees from transferring the business to entities that could undermine its competitive advantage. These termination conditions emphasize the importance of compliance and adherence to brand standards for Embassy Suites franchisees.