Who is required to sign a Guaranty for an Embassy Suites By Hilton franchise?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
After a review of the financial information submitted with your Application and the proposed ownership of the Hotel and real property, we determine guaranty requirements. Each required guarantor, who may include the spouse of an owner of the Hotel or the franchisee, must sign a Guaranty, by which the guarantor assumes and agrees to discharge certain of the Franchisee's obligations under the Franchise Agreement. In addition, we may require you to provide a Guaranty from a third party acceptable to us as a condition to our issuing a lender comfort letter for a loan related to the Hotel or as a condition to our consent to certain kinds of loans you or your principals may obtain. Such loans may include those in which the Hotel loan will be cross-collateralized and/or cross-defaulted with loans to other hotels or loans secured by the Hotel that are not for the direct benefit of the Hotel. If we send you a written notice of default, we may also require you to provide a Guaranty from a third party acceptable to us covering all of your obligations under the Franchise Agreement. A copy of the Guaranty is attached as Exhibit E.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 74–75)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the requirement to sign a Guaranty depends on the financial review conducted by the franchisor. Each required guarantor, which may include the spouse of an owner of the hotel or the franchisee themselves, must sign a Guaranty. This document stipulates that the guarantor assumes and agrees to fulfill certain obligations of the franchisee as outlined in the Franchise Agreement. A copy of the Guaranty is included as Exhibit E in the FDD.
Embassy Suites By Hilton may also require a Guaranty from a third party under specific circumstances. This can occur as a condition for issuing a lender comfort letter for a loan related to the hotel. It may also be required as a condition for the franchisor's consent to certain types of loans obtained by the franchisee or its principals. These loans may involve cross-collateralization or cross-default arrangements with loans for other hotels or loans secured by the hotel that are not for the direct benefit of the specific Embassy Suites By Hilton hotel.
Furthermore, if Embassy Suites By Hilton sends a written notice of default to the franchisee, they may require a Guaranty from a third party acceptable to them. This Guaranty would cover all of the franchisee's obligations under the Franchise Agreement. Therefore, the obligation to provide a Guaranty, and from whom it is required, is contingent upon Embassy Suites By Hilton's assessment of the franchisee's financial situation, loan arrangements, and compliance with the Franchise Agreement.