What is the definition of 'Permitted Transfers' in the context of transfers for Embassy Suites By Hilton?

According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, a 'Permitted Transfer' is defined as any transfer by the franchisee or their Equity Owners that does not result in a change of control of the franchisee, the hotel, or the hotel site. This definition is crucial because it distinguishes between transfers that can occur relatively easily and those that require more extensive franchisor review and approval, as outlined in Section 12.2 of the franchise agreement.

For a prospective Embassy Suites By Hilton franchisee, understanding what constitutes a Permitted Transfer is essential for future business planning. Certain transfers, such as those involving publicly traded equity interests or privately held equity interests where the transferee will own less than 50% of the equity, do not require prior notice or consent from Embassy Suites By Hilton. However, other Permitted Transfers, like those to affiliates, family members, or trusts, necessitate advance written notice (at least sixty days), payment of a processing fee, adherence to Embassy Suites By Hilton's procedures, and execution of standard documents.

The distinction between transfers that require notice and consent versus those that do not is significant. Transfers that change control of the franchise, hotel, or site are subject to more stringent requirements and are defined as 'Change of Ownership Transfers,' which are not considered Permitted Transfers. Therefore, franchisees need to be aware of these stipulations to ensure compliance with the franchise agreement and to avoid potential breaches that could lead to termination of the agreement.

In the context of shared facilities agreements, transferring a controlling equity interest in the franchisee, the hotel site, or the agreement without simultaneously transferring a controlling interest in any affiliated Hotel #2 would allow Embassy Suites By Hilton to withdraw consent for the shared facilities arrangement. This highlights the interconnectedness of transfer provisions and operational standards, emphasizing the need for franchisees to consider all aspects of their business arrangements when contemplating a transfer.