Is a franchisee required to make future investments in their Embassy Suites By Hilton hotel?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
We license the Embassy Suites Hotel system ("System") which consists of the elements, including know-how, we periodically designate to identify hotels operating worldwide under the Brand. The System currently includes the Brand and the Marks; access to the Reservation Service; advertising, publicity and other marketing programs and materials; training programs and materials, standards, specifications and policies for construction, furnishing, operation, appearance and service of the hotel, and other elements we refer to in the Franchise Agreement, in the Manual or in other communications to you, and programs for our inspecting your Hotel and consulting with you. We may add elements to the System or modify, alter or delete elements of the System.
We franchise the non-exclusive right to use the System in the operation of your Hotel, under the Brand, at a specified location. You must follow the high standards we have established as the essence of the System. You will be required to make future investments.
The Franchise Agreement you sign will provide for new development, conversion, change of ownership, or re-licensing, depending on your situation. These situations are referred to in this Disclosure Document as "New Development," "Conversion," "Change of Ownership," and "Relicensing," respectively. New Development refers to new building construction. Conversion refers to the renovation of an existing building to bring it into compliance with our Brand Standards so that it may operate as a Brand hotel. Change of Ownership refers to the transfer of ownership or control of an existing Brand hotel to a new owner. Re-licensing refers to the grant of a new franchise after the expiration of a prior franchise for the same hotel. Adaptive Reuse is also a category shown on the Franchise Application. It is a form of Conversion.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 8–15)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, franchisees are required to make future investments in their hotels. This requirement is part of maintaining the high standards established by Embassy Suites By Hilton as the essence of their System.
This obligation means that franchisees must be prepared to invest further capital into the business beyond the initial franchise fee and startup costs. These investments could cover various aspects, such as renovations, upgrades to meet new brand standards, or implementing new technologies or services.
The Franchise Agreement will specify terms for new development, conversion, change of ownership, or re-licensing, which may trigger additional investment requirements. Conversion refers to renovating an existing building to comply with Embassy Suites By Hilton's Brand Standards, while re-licensing involves granting a new franchise after a prior one expires for the same hotel. Therefore, franchisees should carefully review the Franchise Agreement to understand the scope and potential costs of these future investments to ensure they are financially prepared to meet these obligations throughout the term of the franchise agreement.