What does 'PIP Fee' refer to in the Embassy Suites By Hilton franchise agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2.2.3 you or Transferee pay to us, on or before the date of Closing, the PIP Fee, and all amounts due to us and our Affiliates through the date of the Closing. We will estimate the amounts due to us through the date of Closing, which you and the Transferee may agree to escrow, to be disbursed to us at Closing to fulfill this obligation. You must agree to escrow the estimated amounts due to us if we agree to execute any documents pursuant to Standard Operating Procedure 50 10 5(I) (or any equivalent or successor) of the United States Small Business Administration in connection with a Closing. If our estimate of the amounts due to us exceeds the amount actually owed to us, we will refund the difference to you, generally within thirty (30) days after the date of Closing;
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, the 'PIP Fee' is referenced within the context of transferring ownership of a franchise. Specifically, before a transfer can be completed, the franchisee or the transferee must pay the PIP Fee to Hilton Franchise Holding LLC. This fee, along with any other outstanding amounts owed to Hilton or its affiliates, must be paid on or before the closing date of the transfer.
Embassy Suites By Hilton will estimate the total amount due, and the franchisee and transferee can agree to place that amount in escrow. These funds will then be disbursed to Embassy Suites By Hilton at the closing to satisfy the obligation. If the estimated amount exceeds the actual amount owed, Embassy Suites By Hilton will refund the difference, typically within 30 days after the closing date.
This requirement ensures that Embassy Suites By Hilton receives all outstanding payments before the franchise changes hands. It also provides a mechanism for resolving any discrepancies in the estimated versus actual amounts owed, offering some financial protection to both the transferring franchisee and the new transferee. Prospective franchisees should carefully review the conditions under which the PIP Fee is assessed and the process for its payment and reconciliation during a transfer of ownership.