What law governs and construes the Participation Agreement for Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
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16.0 MISCELLANEOUS
16.1 Severability and Interpretation.
16.1.1 If any provision of this Agreement is held to be unenforceable, void or voidable, that provision will be ineffective only to the extent of the prohibition, without in any way invalidating or affecting the remaining provisions of this Agreement, and all remaining provisions will continue in effect, unless the unenforceability of the provision frustrates the underlying purpose of this Agreement. If any provision of this Agreement is held to be unenforceable due to its scope, but may be made enforceable by limiting its scope, the provision will be considered amended to the minimum extent necessary to make it enforceable.
- 16.1.2 This Agreement will be interpreted without interpreting any provision in favor of or against either Party by reason of the drafting of the provision, or either of our positions relative to the other.
- 16.1.3 Any covenant, term or provision of this Agreement that provides for continuing obligations after the expiration or termination of this Agreement will survive any expiration or termination.
16.2 Governing Law, Jurisdiction and Venue.
- 16.2.1 The Parties agree that, except to the extent governed by the United States Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq.), as amended, this Agreement will be governed by the laws of the State of New York without recourse to New York choice of law or conflicts of law principles. Nothing in this Section is intended to invoke the application of any franchise, business opportunity, antitrust, "implied covenant," unfair competition, fiduciary or any other doctrine of law of the State of New York or any other state that would not otherwise apply absent this Subsection 16.2.1.
- 16.2.2 The Parties agree that any action brought pursuant to this Agreement or the relationship between them must be brought in the U.S. District Court for the Eastern District of Virginia, in Alexandria, Virginia, or if that court lacks subject matter jurisdiction, then in a court of competent jurisdiction whose jurisdiction includes either Fairfax County, Virginia or New York, New York, or in the county and state where the Hotel is located. You consent to personal jurisdiction and venue in each of these jurisdictions and waive, and agree not to assert, move or otherwise claim that the venue in any of these jurisdictions is for any reason improper, inconvenient, prejudicial or otherwise inappropriate.
- 16.3 Exclusive Benefit. This Agreement is exclusively for our and your benefit, and none of the obligations of you or us in this Agreement will run to, or be enforceable by, any other party (except for any rights we assign or delegate to one of our Affiliates or covenants in favor of our Affiliates, which rights and covenants will run to and be enforceable by our Affiliates or their successors and assigns) or give rise to liability to a third party, except as otherwise specifically set forth in this Agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Embassy Suites By Hilton Franchise Disclosure Document, the Participation Agreement, like the Franchise Agreement, is generally governed by the laws of the State of New York, with some exceptions. Specifically, this is with the exception of the United States Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq.), as amended. However, this is without applying New York's choice of law principles that could potentially incorporate laws from other jurisdictions. This means that disputes arising under the Participation Agreement will typically be interpreted under New York law, providing a consistent legal framework unless federal trademark law applies.
However, the Illinois Addendum to the Franchise Agreement modifies this general rule for franchisees in Illinois. For these franchisees, the agreement is governed by New York law, "except as otherwise required by the Illinois Franchise Disclosure Act." This means that the Illinois Franchise Disclosure Act takes precedence over New York law to the extent that they conflict. Additionally, certain provisions in the standard agreement, such as those concerning jurisdiction, venue, and jury trial waivers, do not waive any rights conferred to the franchisee under the Illinois Franchise Disclosure Act.
For a prospective Embassy Suites By Hilton franchisee, it's crucial to understand which state's laws will govern the agreement, as this can significantly impact their rights and obligations. Franchisees operating in Illinois should pay close attention to the Illinois Addendum and be aware of the protections afforded to them under the Illinois Franchise Disclosure Act. It would be prudent for prospective franchisees to seek legal counsel to fully understand the implications of the governing law and any addenda that may apply to their specific situation.