What happens if an Embassy Suites By Hilton franchisee becomes a Sanctioned Person?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2.11 you, your Affiliate or any Guarantor become a Sanctioned Person or are owned or controlled by a Sanctioned Person or fail to comply with the provisions of Subsection 16.13;
16.13 Sanctioned Persons and Anti-bribery Representations and Warranties.
16.13.1 You represent, warrant and covenant to us and our Affiliates, on a continuing basis, that:
16.13.1.1 neither you, nor any Person having Control over you or the Hotel, is a Sanctioned Person;
16.13.1.2 you have not and will not obtain, receive, transfer or provide any funds, property, debt, equity, or other financing related to this Agreement and the Hotel or Hotel Site to/from a Sanctioned Person;
(d) Guarantor represents, warrants and covenants to Franchisor that Guarantor, including its directors, officers, senior management, shareholders and other persons having a controlling interest in Guarantor: (i) is not, and, to your actual or constructive knowledge, is not owned or controlled by, or acting on behalf of, Sanctioned Persons or, to Guarantor's actual knowledge, otherwise the target of Trade Restrictions; (ii) have not and will not obtain, receive, transfer or provide any funds, property, debt, equity or other financing related to the Franchise Agreement and the Hotel or Hotel Site to/from any entity that qualifies as a Sanctioned Person or, to your actual or constructive knowledge, is otherwise the target of any applicable Trade Restrictions' (iii) Guarantor is familiar with the provisions of applicable Anti-Corruption Laws and shall comply with applicable Anti-Corruption Laws in performance of its obligations under or in connection with this Guaranty and the Franchise Agreement and any related agreements;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, if a franchisee, their affiliate, or any guarantor becomes a Sanctioned Person, or is owned or controlled by one, or fails to comply with the provisions of Subsection 16.13, it constitutes a default of the Franchise Agreement. This is explicitly stated as one of the conditions under which Embassy Suites By Hilton can issue a written notice of default.
Furthermore, Embassy Suites By Hilton requires franchisees to represent and warrant on a continuing basis that neither they nor any person having control over them or the hotel is a Sanctioned Person. They must also warrant that they will not provide any funds or financing related to the agreement or the hotel to or from a Sanctioned Person. These representations and warranties also extend to convictions or adjudications related to bribery, corruption, money laundering, fraud, trade sanctions, human trafficking, and other illegal activities.
In addition, the guarantor must also represent, warrant, and covenant that they are not a Sanctioned Person. The guarantor must also comply with all Anti-Corruption Laws.
These stipulations are in place to ensure that Embassy Suites By Hilton complies with international laws and regulations, and to protect its brand reputation by avoiding association with individuals or entities involved in illegal or unethical activities. A prospective franchisee should fully understand these requirements and ensure their business practices align with these standards to avoid potential default and termination of their franchise agreement.