What happens if an Embassy Suites By Hilton audit reveals an underpayment of fees?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
10.3.2 If any inspection or audit reveals that you understated or underpaid any payment due to us, you will promptly pay to us the deficiency, plus interest from the date each payment was due until paid at the interest rate set forth in Section 16.15 of this Agreement.
10.3.3 If the audit or inspection reveals that the underpayment is willful, or is for five percent (5%) or more of the total amount owed for the period being inspected, you will also reimburse us for all inspection and audit costs, including reasonable travel, lodging, meals, salaries and other expenses of the inspecting or auditing personnel.
Our acceptance of your payment of any deficiency will not waive any rights we may have as a result of your breach, including our right to terminate this Agreement.
If the audit discloses an overpayment, we will credit this overpayment against your future payments due under this Agreement, without interest, or, if no future payments are due under this Agreement, we will promptly pay you the amount of the overpayment without interest.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, if an inspection or audit reveals that a franchisee has understated or underpaid any amount due to the company, the franchisee must promptly pay the deficiency. This payment will also include interest calculated from the date the original payment was due until it is paid. The interest rate used for this calculation is detailed in Section 16.15 of the franchise agreement.
Furthermore, if the audit reveals that the underpayment was willful or amounts to five percent or more of the total amount owed for the audited period, the franchisee is responsible for reimbursing Embassy Suites By Hilton for all inspection and audit costs. These costs include reasonable expenses related to travel, lodging, meals, salaries, and other expenses incurred by the personnel conducting the inspection or audit.
It is important to note that Embassy Suites By Hilton's acceptance of the payment for the deficiency does not waive any other rights they may have due to the breach. This includes the right to terminate the franchise agreement. Conversely, if an audit reveals an overpayment, Embassy Suites By Hilton will credit the overpayment against future payments due from the franchisee, without interest. If no future payments are due, the company will promptly pay the overpayment amount back to the franchisee, also without interest.