When does title to the Authorized Equipment vest in the Embassy Suites By Hilton franchisee?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
- Authorized Equipment As Personal Property/Insurance Requirements. In addition to any other specific purchase terms required by the Preferred Provider, the following purchase terms and conditions will apply to any Authorized Equipment obtained from a Preferred Provider or HSS. The Authorized Equipment will be at all times, personal property which will not, by reason of connection to the Hotel, become a fixture or appurtenance to the Hotel, and until such time as Customer or its designated third party pays to the Preferred Provider the total sum for the Authorized Equipment as required hereunder, the Authorized Equipment will remain the property of the Preferred Provider, and title will remain with the Preferred Provider, free from any claims of Customer or the holder of any lien or encumbrance on the Hotel and/or any other property of Customer. Customer will maintain fire, extended coverage, vandalism, and malicious mischief insurance on the Authorized Equipment in an amount not less than the purchase price of the Authorized Equipment. Said insurance will name HSS as an additional insured. For so long as this obligation remains in effect, Customer will furnish to HSS a certificate of the insurance carrier describing the terms and coverage of the insurance in force, the persons insured, and the fact that the coverage may not be canceled, altered or permitted to lapse or expire without thirty (30) days advance written notice to HSS. Upon payment in full, title to the Authorized Equipment will vest in the Customer and will be free and clear of the above requirements relating to insurance and of all of the Preferred Provider's liens, claims and encumbrances and the Authorized Equipment will become the sole property of Customer. Customer assumes the expense of delivery and in-transit insurance for the Authorized Equipment.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, title to the Authorized Equipment vests in the franchisee, referred to as the Customer, upon full payment to the Preferred Provider. Until the total sum for the Authorized Equipment is paid, the equipment remains the property of the Preferred Provider. This means that Embassy Suites By Hilton franchisees do not own the equipment outright until it is fully paid off.
During the period before full payment, the Authorized Equipment remains the property of the Preferred Provider and is protected from any claims by the franchisee or any lienholders on the hotel property. The franchisee is also required to maintain insurance coverage, specifically fire, extended coverage, vandalism, and malicious mischief insurance, on the Authorized Equipment. This insurance must be in an amount no less than the purchase price of the Authorized Equipment and must name HSS as an additional insured.
Furthermore, the franchisee must provide HSS with a certificate of insurance, ensuring that the coverage cannot be canceled or altered without thirty days' advance written notice to HSS. Once the Authorized Equipment is paid for in full, the franchisee assumes sole ownership, free from any liens, claims, or encumbrances by the Preferred Provider, and the insurance requirements related to HSS are lifted. The franchisee is responsible for the expenses related to the delivery and in-transit insurance of the Authorized Equipment.