What is the termination fee for Embassy Suites By Hilton during the third year after a Customer Refresh?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
(subject to accrued rights and obligations).
Upon termination of this TSP Agreement, Customer will be required to assume any remaining lease payments of HSS as to the Network Authorized Equipment that is provided Customer pursuant to this TSP Agreement or to purchase such equipment from HSS's lessor. The costs (which will vary depending upon the equipment involved and the timing of the termination) and the various options availa
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 FDD, the termination fee for the Technology Solution Program (TSP) Agreement for Embassy Suites By Hilton, if terminated during the third year after a Customer Refresh of Network Authorized Equipment, is $1,400. This fee is designed to reimburse the Preferred Provider or HSS for costs related to the start-up and provision of maintenance services.
The Customer Refresh program requires franchisees to replace or refresh authorized equipment approximately every three years, with the timing determined by HSS. Failure to meet HSS's timeline for the refresh can result in additional fees and costs. The terms and conditions of the authorized equipment maintenance services, including termination fees, remain consistent with the initial agreement, although the Maintenance Company may exclude certain issues caused by the franchisee from its maintenance obligations.
It's important to note that the termination fee structure varies depending on when the termination occurs relative to the start date of the equipment shipment and any subsequent Customer Refresh. The fee decreases over time, but a termination after a Customer Refresh resets the fee schedule based on the refresh date. This means that franchisees need to carefully consider the timing of any potential termination in relation to the equipment refresh cycle to understand the applicable termination fees.