Does the franchisee have to indemnify Embassy Suites By Hilton for breaches of representations and warranties?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
equity, on account of any matter, cause or thing whatsoever that has happened, developed or occurred relating to this Agreement or the relationship between you and us on or before the Effective Date of this Agreement. This release will survive the termination of this Agreement.
- 16.9 Remedies Cumulative. The remedies provided in this Agreement are cumulative. These remedies are not exclusive of any other remedies that you or we may be entitled to in case of any breach or threatened breach of the terms and provisions of this Agreement.
- 16.10 Economic Conditions Not a Defense. Neither general economic downturn or conditions nor your own financial inability to perform the terms of this Agreement will be a defense to an action by us or one of our Affiliates for your breach of this Agreement.
- 16.11 Representations and Warranties. You warrant, represent and agree that all statements in your franchise application in anticipation of the execution of this Agreement, and all other documents and information submitted to us by you or on your behalf are true, correct and complete as of the date of this Agreement. You further represent and warrant to us that:
- 16.11.1 you have independently investigated the risks of operating the Hotel under the Brand, including current and potential market conditions and competitive factors and risks, and have made an independent evaluation of all such matters and reviewed our franchise disclosure document, if applicable;
- 16.11.2 neither we nor our representatives have made any promises, representations or agreements other than those provided in the Agreement or in our franchise disclosure document provided to you in connection with the offer of this Agreement, if applicable, and you acknowledge that you are not relying on any promises, representations or agreements about us or the franchise not expressly contained in this Agreement in making your decision to sign this Agreement;
- 16.11.3 you have the full legal power authority and legal right to enter into this Agreement;
- 16.11.4 this Agreement constitutes a legal, valid and binding obligation and your entry into, performance and observation of this Agreement will not constitute a breach or default of any agreement to which you are a party or of any Law;
- 16.11.5 if you are a corporation, limited liability company, or other entity, you are, and throughout the Term will be, duly formed and validly existing, in good standing in the state in which you are organized, and are and will be authorized to do business in the state in which the Hotel is located;
- 16.11.6 no Equity Interest has been issued, converted to, or is held as, bearer shares or any other form of ownership, for which there is no traceable record of the identity of the legal and beneficial owner of such Equity Interest; and
- 16.11.7 you hereby indemnify and hold us harmless from any breach of these representations and warranties, which will survive the termination of this Agreement.
- 16.12 Counterparts. This Agreement may be signed in counterparts, each of which will be considered an original, and the Parties agree to conduct the transaction by electronic means.
- 16.13 Sanctioned Persons and Anti-bribery Representations and Warranties.
- 16.13.1 You represent, warrant and covenant to us and our Affiliates, on a continuing basis, that:
- 16.13.1.1 neither you, nor any Person having Control over you or the Hotel, is a Sanctioned Person;
- 16.13.1.2 you have not and will not obtain, receive, transfer or provide any funds, property, debt, equity, or other financing related to this Agreement and the Hotel or Hotel Site to/from a Sanctioned Person;
- 16.13.1.3 neither you, nor any Person having Control over you or the Hotel, has been convicted of, pleaded guilty to, or otherwise been adjudged liable for any violation of laws, ordinances, rules or regulations that pertain to bribery or corruption, money laundering, competition, securities or financial fraud, trade sanctions or export controls, human trafficking, sex trade, or forced labor;
- 16.13.1.4 any funds received or paid in connection with entry into or performance of this Agreement have not been and will not be derived from illegal sources or activities, or commingled with illegal funds, and that you are not engaging in this transaction in furtherance of a criminal act;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the franchisee does have to indemnify and hold harmless Embassy Suites By Hilton from any breach of the representations and warranties made in the agreement. This obligation survives the termination of the agreement. Specifically, the franchisee represents and warrants that they have independently investigated the risks of operating the hotel, that neither Embassy Suites By Hilton nor its representatives have made promises outside of the franchise agreement or franchise disclosure document, and that the franchisee has the legal authority to enter into the agreement. They also warrant that the agreement is a binding obligation, and if the franchisee is a business entity, that it is properly formed and in good standing.
This means that if the franchisee violates any of these representations or warranties, they will be responsible for covering any losses, damages, or costs that Embassy Suites By Hilton incurs as a result. This indemnification requirement is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's actions or misrepresentations.
However, the franchisee does not have to indemnify Embassy Suites By Hilton to the extent damages are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of Embassy Suites By Hilton. This exception does not apply if the claims were asserted against Embassy Suites By Hilton on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or Embassy Suites By Hilton's failure to compel compliance with the agreement.
The franchisee must provide written notice to Embassy Suites By Hilton of any action, suit, proceeding, claim, demand, inquiry, or investigation involving an Indemnified Party within five days of becoming aware of it. At Embassy Suites By Hilton's election, the franchisee will defend them and/or the Indemnified Parties. If the franchisee fails to do so, Embassy Suites By Hilton may elect to assume the defense at the franchisee's expense and risk. Embassy Suites By Hilton is not required to seek recovery from third parties or otherwise mitigate their losses to maintain a claim against the franchisee.