Is an Embassy Suites By Hilton franchisee prohibited from being a Competitor?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, you may not be a Competitor (defined below) and we reserve the right to not approve a Competitor, or any entity that is the exclusive manager for a Competitor through itself or an affiliate, to manage your Hotel. If your Management Company becomes a Competitor, you will have 90 days to retain a qualified substitute Management Company that we approve.
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, franchisees are restricted from being a Competitor during the term of the Franchise Agreement. A "Competitor" is defined as any entity that owns, licenses, or franchises a Competing Brand. A "Competing Brand" is determined by Embassy Suites By Hilton as a hotel brand that competes with the Embassy Suites By Hilton system or any Network Hotel.
However, there are exceptions to this restriction. An individual or entity is not considered a Competitor if they are a franchisee of a Competing Brand, manage a Competing Brand hotel (provided they are not the exclusive manager), or own a minority interest in a Competing Brand without holding a position as an officer, director, or employee, or exercising control over the Competing Brand's business decisions.
Embassy Suites By Hilton retains the right to disapprove a Competitor, or an entity exclusively managing a Competitor, from managing an Embassy Suites By Hilton hotel. If a franchisee's Management Company becomes a Competitor, the franchisee has 90 days to find a qualified substitute Management Company approved by Embassy Suites By Hilton. This policy ensures that franchisees and their management do not directly benefit competing hotel brands while operating an Embassy Suites By Hilton franchise.