What is the range of the procurement fee charged by HSM to an Embassy Suites By Hilton franchisee?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
If you choose to buy from HSM, it will invoice you for the cost of the products plus freight, sales tax and other actual costs, plus a procurement fee that ranges 4% to 10% of the project cost. HSM may offer you a payment plan. These payment plans are agreed with each franchisee individually based on the type of project, and specifically customized to the project's scope of work and overall timeline. Payment dates are also based on the project's timeline. The interest rate for late payments is 18.5% per year, compounded daily. Change orders must be paid in full, either in advance or with the next installment due.
Source: Item 5 — INITIAL FEES (FDD pages 22–27)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, if a franchisee chooses to buy products from HSM (Hilton Supply Management), HSM will invoice the franchisee for the cost of the products, freight, sales tax, and other actual costs, in addition to a procurement fee. This procurement fee ranges from 4% to 10% of the total project cost.
This fee covers HSM's services in procuring furniture, fixtures, equipment, and supplies for the hotel. It's important to note that while Embassy Suites By Hilton recommends purchasing these items from HSM or approved third parties, franchisees are generally not obligated to do so, giving them the option to source these items independently. However, if they opt for HSM's procurement services, they should factor in this additional fee on top of the direct costs of the items.
Furthermore, the FDD mentions that HSM may offer payment plans to franchisees, which are agreed upon individually based on the project type and customized to the project's scope and timeline. The interest rate for late payments is 18.5% per year, compounded daily, so franchisees should ensure timely payments to avoid incurring these charges. Change orders must be paid in full, either in advance or with the next installment due.