Under what specific circumstances might Embassy Suites occasionally grant a Restricted Area Provision for a Change of Ownership or Re-licensing?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, however, agree to give franchisees certain specific territorial restrictions ("Restricted Area Provision") for an area surrounding the franchised hotel and encompassing the immediate competitive market for the hotel as may be agreed on by the parties ("Restricted Area"). If we agree to give you a Restricted Area Provision for your New Development or Conversion, it will normally be for an agreed-on time period, which is shorter than the term of the Franchise Agreement ("Restrictive Period"). We will not normally grant a Restricted Area Provision for a Change of Ownership or Re-licensing, although we will occasionally do so under certain unique circumstances. The following discussion applies where we agree to give you a Restricted Area Provision in your Franchise Agreement:
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- Restricted Area.
The boundaries of the Restricted Area will normally depend on the relevant market in the immediate area and competitive circumstances in the relevant market at the time you sign the Franchise Agreement.
The boundaries will vary in size and shape from hotel to hotel.
Boundaries will not be delineated according to any standard formula, but may be delineated in various ways, including references to cities, metropolitan areas, counties or other political subdivisions, references to streets or highways, or references to an area encompassed within a radius of specified distance from the front door of the hotel.
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- Restricted Area Provision.
The Restricted Area Provision will typically restrict us and our affiliates from operating, or authorizing someone else to operate, another Brand hotel during the Restrictive Period and within the Restricted Area (except as described in Paragraph 3 below).
In the Restricted Area Provision, the term 'Brand' means the name used to identify the chain of hotels operated under the same Chain Code and Standards.
It excludes any other brands or product lines containing "Embassy" in the name.
It also excludes Hilton Worldwide Holdings Inc., its affiliates, and other chains of hotels that include the word "Hilton" as part of their brand name (such as "Hilton Garden Inn," "DoubleTree by Hilton" or "Homewood Suites by Hilton").
Source: Item 12 — TERRITORY (FDD pages 67–70)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the brand typically does not grant a Restricted Area Provision for a Change of Ownership or Re-licensing. However, Embassy Suites may occasionally do so under certain unique circumstances.
For new developments or conversions, Embassy Suites may agree to give franchisees specific territorial restrictions, known as a "Restricted Area Provision," for an area surrounding the franchised hotel. This area encompasses the immediate competitive market and is agreed upon by both parties. If granted, the Restricted Area Provision is typically for a time period shorter than the term of the Franchise Agreement, referred to as the "Restrictive Period."
The boundaries of a Restricted Area depend on the relevant market and competitive circumstances at the time the Franchise Agreement is signed. These boundaries vary in size and shape from hotel to hotel and are not delineated according to any standard formula. They may be defined by references to cities, metropolitan areas, counties, streets, highways, or a specified distance from the hotel. The Restricted Area Provision generally restricts Embassy Suites and its affiliates from operating or authorizing others to operate another Brand hotel within the Restricted Area during the Restrictive Period, with certain exclusions, such as existing hotels, hotels under other brands, and gaming-oriented hotels.