What is the definition of 'Equity Owner' in the context of transfers for Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
Closing/Effective Date**;]** (c) follow our then-current procedure for processing Permitted Transfers, including providing any information we may require in order to review the proposed Transfer and completing our then-current compliance process; and (d) execute our then-current standard documents required for processing Permitted Transfers. 12.2.1.2.1 Affiliate Transfer. You or any Equity Owner may Transfer an Equity Interest or this Agreement to an Affiliate.
12.2.1.2.2 Transfers to a Family Member or Trust. If you or any Equity Owner as of the Effective Date are a natural person, you and such Equity Owner may Transfer an Equity Interest or this Agreement to an immediate family member (i.e., spouse, children, parents, siblings) or to a trust for your benefit or the benefit of the Equity Owner or the Equity Owner's immediate family members.
12.2.1.2.3 Transfer on Death. On the death of Franchisee or an Equity Owner who is a natural person, this Agreement or the Equity Interest of the deceased Equity Owner may Transfer in accordance with such person's will or, if such person dies intestate, in accordance with laws of intestacy governing the distribution of such person's estate, provided that: (a) the transfer on death is to an immediate family member or to a legal entity formed by such family member(s);
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the term "Equity Owner" is used in the context of transfer rights for Embassy Suites By Hilton franchises, but the FDD does not provide a specific definition of the term. The document outlines various scenarios where transfers of equity interests are permitted, such as transfers on death, affiliate transfers, and transfers to family members or trusts. These permitted transfers often involve Equity Owners. The FDD also distinguishes between transfers that require notice and consent from Embassy Suites By Hilton and those that do not, depending on the nature of the transfer and the percentage of equity being transferred.
Specifically, the FDD details conditions and procedures for different types of transfers involving Equity Owners. For instance, in the event of death, the equity interest of a deceased Equity Owner may be transferred to immediate family members or a legal entity formed by them, provided that the family members or entity meet the franchisor's requirements for an approved transferee within one year. Additionally, transfers of equity interests within institutional investment funds or to new fund entities may be permitted under certain conditions, particularly if an asset manager controls these entities.
Given the absence of a precise definition within the provided excerpts, prospective Embassy Suites By Hilton franchisees should seek clarification from the franchisor regarding the exact meaning of "Equity Owner." Understanding who qualifies as an Equity Owner and the implications for equity transfers is crucial for planning purposes and ensuring compliance with the franchise agreement. Franchisees should inquire about any specific criteria or conditions that apply to Equity Owners in the context of transfers, as well as any potential restrictions or requirements that may affect their ability to transfer equity interests in the future.