Does Embassy Suites By Hilton generally offer direct or indirect financing for franchisees?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
tions | Guaranty | | | | | z. Other: Liquidated | 6.4.4.1 and 13.4 | 1.1 | 17 | | | Damages | | | | |
ITEM 10 FINANCING
Other than the development incentive program described below, we generally do not offer direct or indirect financing for franchisees. We may negotiate these incentives when business circumstances warrant. These programs may be modified, limited, extended or terminated at any time without advance notice or amendment of this Disclosure Document.
We generally require payment of the Franchise Application Fee in a lump sum when you submit your Application, but may occasionally allow payment of the Franchise Application Fee in installments over a limited time period before the start of construction work on the hotel. If we do, we will not charge interest or require a security interest over the installment period or require you to sign a note. You may prepay the unpaid amount of the Franchise Application Fee at any time. If there is a default under the Franchise Agreement, the outstanding balance is accelerated and becomes your immediate obligation, along with any court costs and attorneys' fees for collection.
We may, in our sole discretion, offer incentives for new hotels ("Incentives"). An Incentive is a financial contribution that we make to assist with the development or conversion of your Hotel. To receive an Incentive, you and your principals must sign a development incentive note ("Note") in the form attached as Exhibit D-2 when you sign the Franchise Agreement. An Incentive does not have to be repaid, unless the franchise terminates before the end of the Term or a transfer occurs as described below. The Incentive will be disbursed to you within 30 days after the Hotel opens with our consent, as long as: (a) there have been no material adverse changes in the business, legal, litigation, bankruptcy status or finances of you, any guarantors, or the project since we granted approval; (b) you have completed any required PIP; and (c) you have paid the Franchise Application Fee.
An Incentive is not a loan, it is a contingent liability. If your franchise terminates before the end of the Term you must pay us the then-current repayable amount of the Incentive. If you transfer your Hotel you must also pay us the then-current repayable amount of the Incentive, unless we permit the transferee to assume your obligations under the Note.
Source: Item 10 — FINANCING (FDD pages 52–53)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, they generally do not offer direct or indirect financing to franchisees, aside from a development incentive program. These incentive programs can be modified, limited, extended, or terminated at any time without prior notice or amendment to the disclosure document.
However, Embassy Suites By Hilton may offer incentives for new hotels, referred to as "Incentives," which are financial contributions to assist with the development or conversion of a hotel. To receive an Incentive, franchisees and their principals must sign a development incentive note. These incentives do not have to be repaid unless the franchise terminates before the end of its term or a transfer occurs. The incentive will be disbursed within 30 days after the hotel opens with Embassy Suites By Hilton's consent, provided there are no material adverse changes in the business, legal, litigation, bankruptcy status, or finances of the franchisee, any guarantors, or the project, and that all required Property Improvement Plan requirements are completed and the Franchise Application Fee is paid.
In unique or rare circumstances, Embassy Suites By Hilton may choose to offer other types of financing, such as a mezzanine loan or a guaranty of a franchisee's note, lease, or other obligations. The specific terms of such financing, including the amount, term, repayment obligations, interest, fees, costs, penalties, security interests, and default provisions, would be based on the unique circumstances and financial situation of the hotel and agreed upon at the time of origination. The brand does not provide sample forms for these types of documents, as they are tailored to each situation.