What costs is Embassy Suites By Hilton responsible for if they delay the Refresh?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
Customer will be responsible for the fees and costs for installation services relative to Network Authorized Equipment as well as any Standard Plus Equipment. Under the terms and conditions of the Total Solution Program's Refreshment Program (the "Refreshment Program") of Network Authorized Equipment, HSS anticipates that Network Authorized Equipment will be replaced or refreshed in HSS's sole discretion (the "Refresh"), on an approximate three (3) year cycle, starting approximately three (3) years after the initial shipment of Network Authorized Equipment. HSS will be responsible for the fees and costs for installation services of Network Authorized Equipment on the date that such equipment is refreshed under the Refreshment Program. Customer's Refresh will be timed to occur prior to the end of the three (3) year cycle. If Customer fails to meet HSS's timeline for such Refresh, including order dates for equipment and software, Customer will be responsible for all fees and costs incident to such delay, including, but not limited to, rent extension costs on Network Authorized Equipment and higher fees and costs for equipment maintenance and software maintenance.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, Embassy Suites By Hilton is responsible for the fees and costs for installation services of Network Authorized Equipment on the date that such equipment is refreshed under the Refreshment Program. However, if the franchisee fails to meet Embassy Suites By Hilton's timeline for the Refresh, including order dates for equipment and software, the franchisee will be responsible for all fees and costs incident to such delay. These costs include, but are not limited to, rent extension costs on Network Authorized Equipment and higher fees and costs for equipment maintenance and software maintenance.
This means that Embassy Suites By Hilton covers the initial installation costs when the equipment is refreshed according to their schedule. However, it is crucial for franchisees to adhere to the timelines set by Embassy Suites By Hilton for ordering equipment and software related to the Refresh. Failure to do so shifts the financial burden to the franchisee, who then becomes responsible for expenses like rent extensions on the equipment and increased maintenance fees for both equipment and software.
For a prospective Embassy Suites By Hilton franchisee, this highlights the importance of diligent project management and adherence to the franchisor's timelines. Delays can lead to unexpected costs that can impact profitability. Franchisees should ensure they have systems in place to track deadlines and coordinate with Embassy Suites By Hilton to avoid incurring these additional fees. Understanding the Refresh cycle and planning accordingly is essential for maintaining a smooth operation and avoiding unnecessary expenses.
It is also important to note that the specific amounts for rent extension costs, equipment maintenance fees, and software maintenance fees are not detailed in this section. A prospective franchisee should seek clarification on these potential costs during the due diligence process to fully understand the financial implications of any delays.