What are the exceptions to being considered a 'Competitor' for an Embassy Suites By Hilton franchise?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
A "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 by the Competitor under such Competing Brand. 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, or exercises, or has the right to exercise, control over the business decisions of the Competing Brand. A "Competing Brand" means a hotel brand or trade name that, in our sole business judgment, competes with the System or any Network Hotel.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 74–75)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, a 'Competitor' is defined as any entity that owns, licenses, or franchises a competing hotel brand. However, there are specific exceptions to this definition.
A party will not be considered a 'Competitor' if they are merely a franchisee of a Competing Brand. This means that simply operating a franchise location of a rival hotel chain does not automatically disqualify someone from owning an Embassy Suites By Hilton franchise. Similarly, managing a Competing Brand hotel does not make an entity a 'Competitor', as long as they are not the exclusive manager of that competing brand. This exception acknowledges that management companies may operate hotels under various brands without necessarily posing a competitive threat to Embassy Suites By Hilton.
Finally, owning a minority interest in a Competing Brand does not automatically classify an individual or entity as a 'Competitor'. However, this exception has conditions: neither the individual/entity nor its affiliates can be an officer, director, or employee of the Competing Brand, and they cannot exercise control over the business decisions of the Competing Brand. This aims to prevent individuals with significant influence over a competing brand from leveraging that position to the detriment of Embassy Suites By Hilton.