How does Embassy Suites By Hilton define a 'Competing Brand'?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
"Competing Brand" means a hotel brand or trade name that, in our sole business judgment, competes with the System, or any System Hotel or Network Hotel.
"Competitor" means any individual or entity that, at any time during the Term, whether directly or through an Affiliate, owns in whole or in part, or is the licensor or franchisor of a Competing Brand, irrespective of the number of hotels owned, licensed or franchised under such Competing Brand name.
A Competitor does not include an individual or entity that: (i) is a franchisee of a Competing Brand; (ii) manages a Competing Brand hotel, so long as the individual or entity is not the exclusive manager of the Competing Brand; or (iii) owns a minority interest in a Competing Brand, so long as neither that individual or entity nor any of its Affiliates is an officer, director, or employee of the Competing Brand, provides services (including as a consultant) to the Competing Brand, or exercises, or has the right to exercise, Control over the business decisions of the Competing Brand.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Embassy Suites By Hilton defines a 'Competing Brand' as a hotel brand or trade name that, in their sole business judgment, competes with the Embassy Suites By Hilton system, any Embassy Suites By Hilton Hotel, or any Network Hotel. This definition grants Embassy Suites By Hilton significant discretion in determining what constitutes a competing brand.
This definition is important because it affects various aspects of the franchise agreement, particularly concerning conflicts of interest and competitive activities. For example, the FDD specifies that a 'Competitor' is any entity that owns, licenses, or franchises a Competing Brand. However, there are exceptions, such as franchisees of a Competing Brand, managers of a Competing Brand hotel (if not the exclusive manager), and those with a minority interest without control over the Competing Brand's business decisions.
For a prospective Embassy Suites By Hilton franchisee, this definition has several implications. It restricts the franchisee's ability to be involved with other hotel brands that Embassy Suites By Hilton deems competitive. This could limit investment opportunities or prior business relationships. It is crucial for potential franchisees to understand the scope of this definition and how it might impact their other business interests. Franchisees should seek clarification from Embassy Suites By Hilton regarding specific brands that might be considered 'Competing Brands' to avoid potential conflicts and ensure compliance with the franchise agreement.