What termination fees will Embassy Suites By Hilton pay upon termination of the agreement?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
thly Royalty Fees multiplied by sixty (60); or (b) $10,000 multiplied by the number of approved Guest Rooms at the Hotel.] [SELECT FOR GU the greater of: (a) the Hotel's Average Monthly Royalty Fees multiplied by sixty (60); or (b) $11,200 multiplied by the number of approved Guest Rooms at the Hotel.]
13.4.1.4 If termination occurs after the second anniversary of the Opening Date but before the final sixty (60) calendar months of the Term, you will pay us Liquidated Damages in an amount equal to the Hotel's Average Monthly Royalty Fees multiplied by sixty (60).
13.4.1.5 If there are fewer than sixty (60) months remaining in the Term on the date of termination, you will pay us Liquidated Damages in an amount equal to the Hotel's Average Monthly Royalty Fees multiplied by the number of months remaining in the Term.
13.4.2 Payment of Liquidated Damages. Payment of Liquidated Damages is due thirty (30) days following termination of this Agreement or on demand.
[SELECT FOR CI, OL:
13.4 Termination Fee on Termination
- 13.4.1 Termination Fee. You agree that if this Agreement is terminated by us under this Section 13, you will pay a termination Fee equal to:
- (a) $25,000 multiplied by the number of approved guest Rooms at the Hotel if termination occurs (i) before you begin the Hotel Work, and you or any Guarantor (or your or any Guarantor's Affiliates) directly or indirectly, enter into a franchise, license, management, lease and/or other similar agreement for or begin construction or commence construction operation of a hotel, motel, inn, or similar facility at the Hotel Site within one (1) year after termination, or (ii) after you begin the Hotel Work but before the Opening Date, unless your failure to complete the Hotel Work was the result of Force Majeure:
- (b) The greater of: (i) the Hotel's Average Monthly Royalty Fees multipl
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to the 2025 Embassy Suites By Hilton Franchise Disclosure Document, if Embassy Suites By Hilton terminates the agreement, the franchisee must pay a termination fee. The amount depends on when the termination occurs. If it happens before the hotel work begins and the franchisee (or their affiliates) enters into a similar agreement at the hotel site within one year, or after the hotel work begins but before the opening date (unless due to Force Majeure), the fee is $25,000 multiplied by the number of approved guest rooms.
If termination occurs on or after the opening date but before the second anniversary, the fee is the greater of (i) the hotel's average monthly royalty fees multiplied by 60, or (ii) $25,000 multiplied by the number of approved guest rooms. For terminations after the second anniversary but before the final 60 months of the term, the fee is the average monthly royalty fees multiplied by 60. If there are fewer than 60 months remaining in the term at termination, the fee is the average monthly royalty fees multiplied by the number of remaining months.
The FDD specifies that this termination fee is an agreed fee and not a penalty or liquidated damages. It also clarifies that the fee does not give the franchisee the right to terminate the agreement early. The franchisee must pay the termination fee within 30 days after termination or on demand. Embassy Suites By Hilton may also elect to seek actual damages in lieu of the termination fee under certain circumstances, such as multiple franchise agreement terminations or an unapproved transfer to a competitor.