Does Embassy Suites By Hilton prohibit franchisees from providing funds to Sanctioned Persons?

According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, franchisees are prohibited from providing funds to Sanctioned Persons. The agreement states that franchisees must warrant and covenant that they 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 or from a Sanctioned Person. This extends not only to the franchisee but also to any person having control over the franchisee or the hotel.

This provision is a standard practice in franchising to ensure compliance with international trade laws and regulations. Sanctioned Persons are individuals or entities that are subject to trade restrictions or sanctions imposed by governments or international organizations. By prohibiting financial transactions with Sanctioned Persons, Embassy Suites By Hilton aims to avoid any legal or reputational risks associated with such transactions.

Furthermore, the franchisee must also ensure that any funds received or paid in connection with the franchise agreement are not derived from illegal sources or activities. This includes activities related to bribery, corruption, money laundering, competition, securities or financial fraud, trade sanctions or export controls, human trafficking, sex trade, or forced labor. This requirement underscores the importance of ethical and legal conduct in all aspects of the franchise operation.

Prospective franchisees should carefully review these representations and warranties to ensure they can fully comply with these requirements. Failure to comply could result in a breach of the franchise agreement and potential legal consequences. It is advisable to seek legal counsel to fully understand the implications of these provisions.