What is a 'Controlling Affiliate' in relation to an Embassy Suites By Hilton franchise?

According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, an 'Affiliate' is defined as any entity that directly or indirectly Controls, is Controlled by, or is under common Control with, the subject entity. This definition is important for prospective franchisees as it clarifies the relationships that the franchisor, Hilton Franchise Holding LLC, has with other entities, including its parent company, Hilton Worldwide.

The term 'Control' is not explicitly defined in the provided excerpt. However, the document indicates that the definition of 'Affiliate' is relevant within the context of the Franchise Agreement. This means that the actions and financial status of an affiliate could potentially impact the franchisee's operations and obligations under the agreement. For example, certain exemptions from disclosure requirements may apply if the franchisee or its affiliates meet specific business experience and net worth thresholds. Specifically, if the franchisee and/or its affiliates have been in business for at least five years and possess a net worth of at least $7,348,000, the franchise sale may be exempt from certain disclosure requirements.

Furthermore, the concept of a 'Controlling Affiliate' is relevant in the context of transferring equity interest. If a franchisee or its Controlling Affiliate intends to transfer any equity interest, they must provide written notice to the franchisor. Understanding who qualifies as a Controlling Affiliate is therefore crucial for compliance with the terms of the franchise agreement, particularly regarding transfers of ownership or interest in the Embassy Suites By Hilton franchise.

Prospective franchisees should seek clarification from Hilton Franchise Holding LLC regarding the specific criteria used to determine 'Control' and 'Controlling Affiliate' to fully understand their obligations and rights under the Franchise Agreement. This understanding is essential for making informed decisions about investing in an Embassy Suites By Hilton franchise and for ensuring compliance with the agreement's terms throughout the duration of the franchise.