Is an Embassy Suites By Hilton franchisee obligated to purchase specified items from HSM?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
If we or our affiliates furnish, supply, service or equip your Hotel at your request before it opens, then you must pay or reimburse us or them for all costs incurred at your request, and related service fees. In particular, HSM seeks to negotiate with manufacturers and suppliers for the distribution of hotel furniture, furnishings, fixtures, finishes, equipment and supplies, certain food and beverage equipment supplies, and certain hotel services at a discount. We recommend you purchase these items from HSM or such third parties. You may but are not obligated to purchase specified items from HSM or such third parties, except as described in this Disclosure Document. If you choose to buy from HSM, it will invoice you for the cost of the products plus freight, sales tax and other actual costs, plus a procurement fee that ranges 4% to 10% of the project cost.
Source: Item 5 — INITIAL FEES (FDD pages 22–27)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, franchisees are generally not obligated to purchase specified items from HSM (or other third parties), with some exceptions. HSM seeks to negotiate discounts with manufacturers and suppliers for hotel furniture, furnishings, fixtures, equipment, supplies, certain food and beverage equipment, and certain hotel services. Embassy Suites By Hilton recommends that franchisees purchase these items from HSM or such third parties. However, franchisees are not obligated to do so, except as described elsewhere in the FDD. If a franchisee chooses to buy from HSM, they will be invoiced for the cost of the products plus freight, sales tax, other actual costs, and a procurement fee ranging from 4% to 10% of the project cost.
Embassy Suites By Hilton does require franchisees to use certain business computer systems, which may necessitate purchases from specific vendors. For example, franchisees must acquire and install hardware and software for systems like OnQ, Guest Internet Access, GRO, Delphi, Connected Room, Digital Floor Plan, Digital Key system, and the Hilton Opening Transition Tool. While franchisees may have some flexibility in sourcing hardware for the OnQ system, the software components must be acquired from HSS or designated vendors due to their proprietary nature.
Therefore, while Embassy Suites By Hilton encourages the use of HSM for certain procurement needs, it's not generally mandatory. However, franchisees should carefully review the FDD and franchise agreement to understand the specific instances where purchasing from approved or designated suppliers is required, particularly concerning technology and systems critical to brand standards and operational integration.