Under what conditions can Embassy Suites terminate a franchise agreement before its expiration?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding any other provision of this letter agreement, Franchisor may terminate the Franchise Agreement if any of the following occur: (i) Franchisee's default or any subsequent default, in the sole opinion of Franchisor, damages the image or reputation of Franchisor or any brand name owned and/or licensed by Hilton Worldwide Holdings Inc., a Delaware corporation, or its subsidiaries or affiliates (collectively, "Hilton"); (ii) Franchisor is required to terminate the Franchise Agreement by court order or action of any trustee in bankruptcy or debtor in possession of the Hotel; or (iii) the Additional Period expires without other arrangements satisfactory to Franchisor in its sole discretion having been entered into between Franchisor and Lender.
Lender's failure to timely execute and deliver the Assumption Agreement may be deemed a default under the Franchise Agreement entitling Franchisor to terminate the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to the 2025 Embassy Suites Franchise Disclosure Document, Embassy Suites has specific rights to terminate the franchise agreement early under certain circumstances. These circumstances primarily revolve around the franchisee's default, actions that damage the brand's reputation, or issues related to the lender's involvement with the hotel. Specifically, Embassy Suites can terminate the agreement if the franchisee's default, in Embassy Suites's opinion, harms the image or reputation of Embassy Suites or any brand name owned or licensed by Hilton Worldwide Holdings Inc. Additionally, Embassy Suites may terminate the agreement if required by a court order or action of a trustee in bankruptcy or debtor in possession of the hotel.
Another condition that could lead to termination is related to the Lender's Cure Period and Additional Period. If these periods expire without satisfactory arrangements between Embassy Suites and the lender, Embassy Suites reserves the right to terminate the franchise agreement. This provision appears to be in place to protect Embassy Suites's interests in situations where the hotel's financial stability is at risk and the lender is involved in resolving the franchisee's default.
Furthermore, the agreement outlines conditions under which a lender's failure to act can result in Embassy Suites terminating the agreement. For example, if the lender acquires the hotel due to an acquisition and is deemed to have assumed the Franchise Agreement, the lender must execute and return the Assumption Agreement to Embassy Suites within ten business days of receipt. Failure to do so may be considered a default, entitling Embassy Suites to terminate the Franchise Agreement. These termination rights are designed to ensure that Embassy Suites maintains control over its brand and standards, even when financial difficulties or third-party involvement occur.