What document must be signed to receive an Incentive from Embassy Suites By Hilton, and when must it be signed?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, in our sole discretion, offer incentives for new hotels ("Incentives"). An Incentive is a financial contribution that we make to assist with the development or conversion of your Hotel. To receive an Incentive, you and your principals must sign a development incentive note ("Note") in the form attached as Exhibit D-2 when you sign the Franchise Agreement. An Incentive does not have to be repaid, unless the franchise terminates before the end of the Term or a transfer occurs as described below. The Incentive will be disbursed to you within 30 days after the Hotel opens with our consent, as long as: (a) there have been no material adverse changes in the business, legal, litigation, bankruptcy status or finances of you, any guarantors, or the project since we granted approval; (b) you have completed any required PIP; and (c) you have paid the Franchise Application Fee.
Source: Item 10 — FINANCING (FDD pages 52–53)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, to receive a development incentive, franchisees and their principals must sign a development incentive note, referred to as the "Note," which is included as Exhibit D-2 in the Franchise Agreement. This note must be signed when the Franchise Agreement is signed.
The incentive is a financial contribution from Embassy Suites By Hilton to assist with the development or conversion of the hotel. It is not a loan but a contingent liability. The incentive will be disbursed within 30 days after the hotel opens with Embassy Suites By Hilton's consent, provided there are no material adverse changes in the business, legal, litigation, bankruptcy status, or finances of the franchisee, any guarantors, or the project since approval was granted. Additionally, any required Property Improvement Plan (PIP) must be completed, and the Franchise Application Fee must be paid.
The incentive does not have to be repaid unless the franchise terminates before the end of its term or a transfer occurs. If the hotel is transferred, the repayable amount must be paid unless Embassy Suites By Hilton permits the transferee to assume the obligations under the Note. The repayable amount of the incentive decreases over time, with an equal annual percentage reduction based on the term of the franchise. For example, a 10-year term reduces the amount by 1/10th annually, while a 20-year term reduces it by 1/20th annually.