Does Embassy Suites By Hilton have a right of first refusal to purchase a franchise?

According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, under certain circumstances, Embassy Suites By Hilton does not have a right of first refusal. Specifically, an "Acquisition" resulting from a lender's actions (such as a UCC sale or foreclosure) due to the franchisee's default on a loan is not considered a sale or lease of the hotel under the Franchise Agreement. Therefore, these acquisitions are not subject to any right of first refusal that might otherwise be included in the Franchise Agreement.

This provision is outlined within the context of a Mezzanine Lender Comfort Letter, which addresses the relationship between the franchisor, franchisee, and a lender providing a mezzanine loan. The agreement clarifies that if the lender takes action to acquire the hotel due to the franchisee's default, it doesn't automatically trigger the franchisor's right of first refusal. This is designed to facilitate the lender's ability to recover their investment in case of franchisee financial distress.

However, Embassy Suites By Hilton retains certain rights, including the right to terminate the Franchise Agreement if the franchisee's default damages the brand's image or reputation. They can also terminate the agreement if required by a court order or trustee action. This shows that while the franchisor waives its right of first refusal in specific acquisition scenarios, it maintains control over the brand and standards of the Embassy Suites By Hilton franchise.