How does the expiration of the Franchise Agreement affect the Embassy Suites By Hilton HITS Agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
| Agreement | ||
|---|---|---|
| Change of Ownership: Generally, either the remaining Term | ||
| under the existing franchise agreement, or such other term as | ||
| we may approve. | ||
| Spa Amendment 2 | eforea spa: expires on the earlier of: (i) the termination of the | |
| Spa Amendment or (ii) the expiration or termination of the | ||
| Franchise Agreement. | ||
| HITS Agreement 1.1 | The HITS Agreement will run concurrently with the Franchise | |
| Agreement and will automatically terminate on the termination or | ||
| expiration of the Franchise Agreement. | ||
| b. Renewal or Extension of | FA §3 | You do not have the right to renew or extend the Franchise Agreement, including the Spa Amendment. |
| the term | HITS Agreement Not Applicable | The HITS Agreement will run concurrently with the Franchise Agreement. You do not have the right to renew or extend the HITS Agreement. |
| c. Requirements for you to renew or extend | FA – Not applicable | You do not have the right to renew or extend, but if we agree, in our sole discretion, to re-license, you may be asked to sign a contract with materially different terms and conditions from the original Franchise Agreement, and you must comply with any PIP performance conditions that we specify. |
| HITS Agreement Not Applicable | The HITS Agreement will run concurrently with the Franchise Agreement. You do not have the right to renew or extend, but if we agree, in our sole discretion, to re-license, you may be asked to sign a new HITS Agreement with materially different terms and conditions from the original HITS Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 77–87)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the HITS Agreement's term is directly tied to the Franchise Agreement. Specifically, the HITS Agreement will automatically terminate upon the expiration of the Franchise Agreement. This means that when the franchise term ends, so does the agreement governing the Hotel Information Technology Standards (HITS).
This condition has significant implications for a prospective Embassy Suites By Hilton franchisee. It ensures that the technology standards and systems provided under the HITS Agreement are only guaranteed for the duration of the franchise term. If a franchisee does not renew or is not offered a renewal of the Franchise Agreement, they will also lose the rights and obligations associated with the HITS Agreement.
Furthermore, the franchisee does not have the right to renew or extend the HITS Agreement separately from the Franchise Agreement. However, if Embassy Suites By Hilton agrees to re-license the franchise, the franchisee may be required to sign a new HITS Agreement with potentially different terms and conditions. This introduces an element of uncertainty, as the technology landscape and the franchisor's requirements could change significantly by the time a renewal is considered. Franchisees should carefully consider the implications of this interconnectedness when evaluating the long-term prospects of an Embassy Suites By Hilton franchise.