What is the default term length for a new construction Embassy Suites By Hilton franchise?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement ("FA"), Spa Amendment and HITS Agreement | Summary |
|---|---|---|
| a. | FA Addendum §3 | New Construction: Generally, at midnight on the last day of the |
| Length of the | month 23 years after the Effective | |
| franchise term | Date. | |
| Conversion: Generally, | ||
| at midnight on the last day of the | ||
| month | ||
| 10 to 20 years after the Opening Date. | ||
| Provision | Section in | Summary |
| Franchise | ||
| Agreement ("FA"), | ||
| Spa Amendment | ||
| and HITS | ||
| Agreement | ||
| -------------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Change of Ownership: Generally, either the remaining Term | ||
| under the existing franchise agreement, or such other term as | ||
| we may approve. | ||
| Spa Amendment 2 | eforea spa: expires on the earlier of: (i) the termination of the | |
| Spa Amendment or (ii) the expiration or termination of the | ||
| Franchise Agreement. | ||
| HITS Agreement 1.1 | The HITS Agreement will run concurrently with the Franchise | |
| Agreement and will automatically terminate on the termination or | ||
| expiration of the Franchise Agreement. | ||
| b. Renewal or Extension of | FA §3 | You do not have the right to renew or extend the Franchise Agreement, including the Spa Amendment. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the length of the franchise term for new construction is generally set to expire at midnight on the last day of the month, 23 years after the effective date of the franchise agreement. This means that a franchisee can expect to operate their newly constructed Embassy Suites By Hilton hotel for a standard term of 23 years, provided they adhere to the terms and conditions outlined in the franchise agreement.
This term length is a significant factor for prospective franchisees to consider, as it dictates the period during which they can operate under the Embassy Suites By Hilton brand and benefit from its established system and brand recognition. It also influences the franchisee's long-term business planning, including financial projections, investment recovery, and potential resale value. Franchisees should be aware that the franchise agreement specifies the exact 'Effective Date' that starts the 23-year clock.
It is important to note that while the standard term for new construction is 23 years, the franchise agreement also covers situations like conversion, change of ownership, and re-licensing, each with its own term specifics. For instance, conversion franchises have a term of 10 to 20 years after the opening date. This variation highlights the importance of carefully reviewing the franchise agreement to understand the specific terms applicable to the franchisee's situation.
Unlike some franchise systems, the Embassy Suites By Hilton franchise agreement does not provide franchisees with a right to renew or extend the franchise term. If Embassy Suites By Hilton agrees to re-license the franchise, it may require the franchisee to sign a contract with materially different terms and conditions from the original franchise agreement and comply with any performance improvement plan (PIP) conditions.