Under what conditions will an Embassy Suites customer be required to pay a termination fee?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
d, provided or used; (b) the employees and contractors Customer uses in connection with its operation of the Hotel; and (c) data and records. No such audit will unreasonably interfere with Customer's normal business operations. Customer agrees that HSS will not be responsible for any of Customer's costs incurred in cooperating with any audit.
ARTICLE 4. TERMINATION
- 4.1 4.1 Termination. HSS may terminate this Agreement by written notice to Customer on any of the following grounds:
- 4.1.1 Customer fails to pay any sums due and payable under this Agreement and fails to cure such failure within the cure period set forth in the notice, which will not be less than ten (10) days;
- 4.1.2 Customer breaches its obligations under Article 6 (Confidentiality);
- 4.1.3 Customer fails to refresh the Authorized Equipment at the Hotel as required by HSS; and
- 4.1.4 Customer breaches any other provision of this Agreement and does not cure that breach within the cure period set forth in the notice, which will not be less than thirty (30) days.
This Agreement will automatically terminate upon the termination or expiration of the Relationship Agreement.
4.2 4.2 Customer's Obligations upon Termination or Expiration. Upon any such termination the licenses granted to Customer under this Agreement, and the obligations of HSS to provide any Agreement Products and Services will immediately terminate. Customer will immediately cease using all Agreement Products and Services and promptly at HSS's discretion return any and all Agreement Products to HSS other than Authorized Equipment Customer owns, or destroy the same; provided, however, that Customer must return to HSS all Software contained in such Authorized Equipment. All of Customer's covenants and obligations under this Agreement will survive termination and expiration.
- 4.3 4.3 Termination Fees. Upon termination of this Agreement Customer will pay: (a) all unpaid Fees related to the Agreement Products and Services, Software and Authorized Equipment incurred by Customer; (b) all costs to HSS of all the Agreement Products and Services, Software and Authorized Equipment that exceeds what the Customer paid for same; (c) all termination, penalty or administrative fees that would not be payable but for the termination for cause; (d) all costs related to disabling the Agreement Products and Services, together with related intervention or administration fees;
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, a customer may be required to pay a termination fee under several circumstances related to the termination of agreements concerning products, services, software, and authorized equipment.
If a customer terminates their agreement, they are obligated to pay all unpaid fees related to the agreement's products, services, software, and authorized equipment. They must also cover any costs HSS (presumably a service provider) incurs for these items that exceed what the customer has already paid. Additionally, the customer is responsible for all termination, penalty, or administrative fees that arise specifically due to the termination for cause, as well as all costs associated with disabling the agreement products and services, including any related intervention or administration fees. The customer must also pay for any services HSS provides after the termination date at the customer's request and all termination fees outlined in the customer's order document.
Furthermore, if the agreement is terminated (or if the customer's use of the Preferred Provider is terminated) before the third anniversary of the start date (the shipment date of the authorized equipment), the customer will pay a termination fee. This fee is intended to reimburse the Preferred Provider and/or HSS for costs such as reconfiguration expenses and the unamortized costs associated with starting and providing maintenance services. The amount of this termination fee varies depending on when the termination occurs. If termination happens during the first year after the start date, the fee is $3,600.00. If it occurs in subsequent years, the fee decreases: $2,600 during the second year, $1,300 during the third year, and $1,200 thereafter. However, if the termination occurs after a Customer Refresh of Authorized Equipment, the termination fee amounts change to $3,800 during the first year, $2,800 during the second year, $1,400 during the third year, and $1,200 thereafter.