Under what circumstances can Embassy Suites withdraw its consent for the Shared Facilities Arrangement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
If we withdraw our consent pursuant to this paragraph, to the extent that the Shared Facilities are part of Standards, you shall immediately make arrangements to either procure the Shared Facilities, or to construct comparable facilities and amenities, for the exclusive use of the Hotel. Your failure to procure the Shared Facilities or construct comparable facilities and amenities to meet Standards is deemed to be a default that may result in the termination of the Agreement. If the Shared Facilities are no longer a part of the Hotel, you are responsible for immediately removing any Marks or distinctive System features associated with the Brand from any of the Shared Facilities that are accessible to or visible by Hotel guests, and removing all other indicia that the Hotel had joint possession or use of the Shared Facilities with the [Hotel #2] Hotel.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites can withdraw its consent for a Shared Facilities Arrangement under specific circumstances. These include situations where the operation of the shared facilities negatively impacts the brand's experience, goodwill, or reputation. Additionally, if the shared facilities fail to meet the System Standards outlined in the franchise agreement or the agreement for Hotel #2, Embassy Suites may withdraw consent. The termination of either the franchise agreement or the Hotel #2 agreement for any reason also allows Embassy Suites to withdraw its consent.
Furthermore, Embassy Suites can withdraw consent if the franchisee transfers a controlling equity interest in their business, the hotel site, or the franchise agreement without simultaneously transferring a controlling equity interest in Hotel #2 to the same transferee or an affiliate under common control. Such transfers must comply with the transfer provisions of the agreement, and failure to do so constitutes a material breach.
If Embassy Suites withdraws its consent, the franchisee must immediately arrange to either procure the shared facilities or construct comparable facilities and amenities for the exclusive use of the hotel, ensuring they meet the required standards. Failure to do so is considered a default that may lead to the termination of the franchise agreement. The franchisee is also responsible for removing any Embassy Suites branding or features from the shared facilities that are accessible or visible to hotel guests, indicating that the hotel no longer has joint use of the facilities with Hotel #2.
This clause protects Embassy Suites by ensuring that shared facilities maintain brand standards and that changes in ownership do not negatively impact the brand's reputation or operational consistency. For a prospective franchisee, it highlights the importance of maintaining standards in shared facilities and the potential consequences of failing to do so, including the loss of shared facility privileges and potential termination of the franchise agreement.