What is the purpose of the termination fee charged to Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
than the Maintenance Fees charged to any similarly situated Customer (based upon factors determined by HSS in its sole judgment) utilizing equipment substantially similar to the Authorized Equipment and pursuant to an agreement which has terms and conditions substantially similar to this Agreement. No maintenance fees will be charged to Customer for any Non-maintained Equipment as described in Section 1 above.
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- Refresh of Authorized Equipment. Under HSS's refreshment program, Customer will be responsible for and will pay for all fees and costs for the replacement or refreshment of the Authorized Equipment in HSS's sole discretion ("Refresh") on an appro
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, the termination fee is designed to reimburse the Preferred Provider and/or HSS (presumably Hilton Supply Management) in part for specific costs incurred. These costs include reconfiguration expenses, unamortized fees, and the costs associated with the start-up and provision of maintenance services by the Preferred Provider under the agreement. This fee applies if the agreement is terminated, or if the customer's use of the Preferred Provider is terminated, before the third anniversary of the start date, which is defined as the shipment date of the authorized equipment to the customer's hotel.
The amount of the termination fee varies depending on when the termination occurs relative to the start date. If termination happens during the first year following the start date, the fee is $3,600.00. For terminations in subsequent years, the fee structure changes. This tiered approach means that the earlier the termination, the higher the fee, reflecting the greater unamortized costs and initial setup expenses that Embassy Suites By Hilton needs to recoup.
Prospective Embassy Suites By Hilton franchisees should be aware of these termination fees as they represent a significant potential cost if they decide to end the agreement early. It is important to carefully consider the implications of these fees and to factor them into their financial planning. Understanding the conditions under which these fees apply and the specific amounts can help franchisees make informed decisions about their investment and commitment to the Embassy Suites By Hilton brand.