What is the purpose of the Shared Facilities Addendum to the Franchise Agreement for an Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
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EXHIBIT - __
SHARED FACILITIES ADDENDUM TO FRANCHISE AGREEMENT
| among other things, for the operation of the (proposed) [insert Hotel #1 name] | hotel located or to | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------| | be located at [Insert Hotel #1 address ("Hotel"). | | | You (or your Affiliate) and we are also parties to a franchise agreement dated] | ("[Insert | | Brand #2] | Agreement") for the operation of the (proposed) [Insert Hotel #2 name] hotel | | located or to be located at [Insert Hotel #2 address ("Insert Brand #2 | Hotel"). | | You requested that the Hotel and the [Insert Hotel #2] | Hotel (collectively, "Sharing Hotels"), which are | | [or, will be] [Select: part of the same building structure permitted to jointly utilize certain shared hotel facilities and offer to their guests the use of certain shared amenities ("Shared Facilities") in accordance with the terms of this Addendum ("Shared Facilities Arrangement"). | or located in buildings adjacent to one another,] be | | | | For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you and we agree that the following provisions are incorporated into and made a part of the Agreement:
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- We give our consent for the Hotel and the [Hotel #2] Hotel to jointly utilize the Shared Facilities identified during our review and approval of the Plans and Designs for the Hotel and the [Hotel #2] Hotel.
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- Our consent is contingent upon you (or your Affiliate) executing a Shared Facilities Addendum to the **[Hotel #2]**Agreement on the same terms contained in this Addendum.
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- We expressly reserve the right to withdraw our consent and, on notice, require you to discontinue the Shared Facilities Arrangement if:
- a) we determine that such participation is detrimental to the operation of the Hotel, the guest experience, or the goodwill and reputation of the Brand and/or the Marks;
- b) any of the Shared Facilities fail to meet System Standards as set forth under the Agreement and/or the [Hotel #2] Agreement;
- c) either the Agreement or the [Hotel #2] Agreement is terminated for any reason;
- d) You Transfer a controlling Equity Interest in you, the Hotel Site, or the Agreement, without simultaneously selling, leasing, assigning, or Transferring a controlling Equity Interest in you (or your Affiliate controlling [Hotel #2] Hotel), the [Hotel #2] Hotel Site, or the [Hotel #2] Agreement, to the same transferee or a transferee under common control with such transferee. Any Transfers are subject to the Transfer provisions of the Agreement. Failure to comply with the Transfer provisions is a material breach of the Agreement.
If we withdraw our consent pursuant to this paragraph, to the extent that the Shared Facilities are part of Standards, you shall immediately make arrangements to either procure the Shared Facilities, or to construct comparable facilities and amenities, for the exclusive use of the Hotel. Your failure to procure the Shared Facilities or construct comparable facilities and amenities to meet Standards is deemed to be a default that may result in the termination of the Agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, the Shared Facilities Addendum to the Franchise Agreement outlines the terms and conditions when an Embassy Suites By Hilton hotel shares facilities with another hotel. This addendum ensures that both hotels adhere to specific standards and regulations to maintain brand consistency and guest experience.
The addendum addresses several key aspects of shared facility arrangements. It stipulates that the franchisee must either procure the shared facilities or construct comparable facilities if the shared arrangement is discontinued. Failure to do so can result in a default and potential termination of the franchise agreement. The addendum also requires that any new or successor franchise agreements contain the provisions outlined in the Shared Facilities Addendum, and refusal to include these provisions can be a valid reason for Embassy Suites By Hilton to deny the agreement.
Furthermore, the Shared Facilities Addendum addresses scenarios where the agreement with the other hotel ([Hotel #2]) is in default. Any default under the [Hotel #2] Agreement constitutes a simultaneous default of the Embassy Suites By Hilton agreement, and termination of the [Hotel #2] Agreement can lead to the termination of the Embassy Suites By Hilton agreement. The addendum also specifies that the laws of the designated state govern the construction and rights and liabilities of the parties under the addendum, and any breach of its provisions is considered a breach of the overall franchise agreement.
In essence, the Shared Facilities Addendum protects the Embassy Suites By Hilton brand and ensures operational standards are maintained when sharing facilities with another hotel. It outlines the responsibilities and potential risks for the franchisee in such arrangements, emphasizing the importance of adhering to the terms to avoid defaults and potential termination of the franchise agreement.