What is the basis for calculating the Monthly Spa Royalty Fee for an Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| General | |||
| Monthly Spa Royalty Fee | 2% of Gross Spa Revenue. | Payable monthly by the 15th day of the following month. | Payable only if Eforea Spa Amendment is in effect. See Note 1. |
"Gross Spa Revenue" means all revenue from services and retail sales of products from the eforea spa, less allowances for spa rebates and overcharges, but does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa.
If there is a fire or other insured casualty at your Hotel that results in a reduction of Gross Rooms Revenue or Gross Spa Revenue, the Monthly Program, and Monthly Royalty Fees will be equal to the Monthly Program, and Monthly Royalty Fees forecasted on the basis of the Gross Rooms Revenue amount and Gross Spa Revenue you agree on with your insurer(s). However, we have the right to participate with you in negotiating the value of your Gross Rooms Revenue claim with your insurer(s).
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the Monthly Spa Royalty Fee is 2% of Gross Spa Revenue. This fee is only payable if the Eforea Spa Amendment is in effect. Gross Spa Revenue includes all revenue from services and retail sales of products from the eforea spa, less allowances for spa rebates and overcharges. However, it does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa. The Monthly Spa Royalty Fee is due by the 15th day of the following month.
For a prospective Embassy Suites By Hilton franchisee, this means that if they operate an eforea spa at their location, they will need to remit 2% of the spa's gross revenue (excluding taxes and food/beverage sales) to Embassy Suites By Hilton as a royalty. This fee is in addition to other fees such as the Monthly Royalty Fee and Monthly Program Fee, which are based on Gross Rooms Revenue. It is important to note that the spa royalty is only applicable if the Eforea Spa Amendment is in effect, suggesting that operating a spa is optional but incurs this additional royalty if chosen.
Understanding the components of Gross Spa Revenue is crucial for accurate royalty calculations. Franchisees must ensure their accounting systems properly track spa-related income and deductions to comply with the franchise agreement. The exclusion of taxes and food/beverage sales from the gross revenue calculation is a benefit to the franchisee, as it reduces the base amount on which the royalty is calculated. However, the inclusion of retail sales of products means franchisees must carefully track these sales as part of their gross spa revenue.
It is also important to note that if there is a fire or other insured casualty at your Hotel that results in a reduction of Gross Rooms Revenue or Gross Spa Revenue, the Monthly Program, and Monthly Royalty Fees will be equal to the Monthly Program, and Monthly Royalty Fees forecasted on the basis of the Gross Rooms Revenue amount and Gross Spa Revenue you agree on with your insurer(s). However, Embassy Suites By Hilton has the right to participate with you in negotiating the value of your Gross Rooms Revenue claim with your insurer(s).