Under what conditions can Embassy Suites refuse a franchise transfer based on the proposed transferee's qualifications?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, Embassy Suites has the right to refuse a franchise transfer if there is good cause. Good cause includes several conditions related to the proposed transferee's qualifications and conduct. Specifically, Embassy Suites can refuse a transfer if the proposed transferee fails to meet the brand's then-current reasonable qualifications or standards.
Embassy Suites can also refuse the transfer if the proposed transferee is a competitor of the franchisor or subfranchisor, ensuring that sensitive business information and practices are not shared with rival companies. Additionally, refusal is permitted if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the franchise agreement and all applicable laws.
Finally, Embassy Suites can deny a transfer if either the franchisee or the proposed transferee has failed to pay any sums owing to the franchisor or has not cured any default in the Franchise Agreement existing at the time of the proposed transfer. These conditions protect Embassy Suites's financial interests and ensure that all parties meet their contractual obligations before a transfer is approved. These stipulations are typical in franchising to maintain brand standards and protect the franchise system.