Under what circumstances must an Embassy Suites By Hilton franchisee indemnify the Indemnified Parties?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.2 You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, errors, omissions, negligence or misconduct of you or anyone related to you or the Hotel.
You may not rely on this exception to your indemnity obligation if the claims were asserted against us or any other Indemnified Party on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or our failure to compel you to comply with the provisions of this Agreement, including compliance with Standards, Laws or other requirements.
- 14.3 You will give us written notice of any action, suit, proceeding, claim, demand, inquiry or investigation involving an Indemnified Party within five (5) days of your knowledge of it.
At our election, you will defend us and/or the Indemnified Parties against the same.
If you fail to defend us and/or the Indemnified Parties, we may elect to assume, but under no circumstance will we be obligated to undertake, the defense and/or settlement of the action, suit, proceeding, claim, demand, inquiry or investigation at your expense and risk.
- 14.5 Your obligations under this Section 14 will survive expiration or termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, a franchisee is generally required to indemnify the Indemnified Parties, which include Hilton Franchise Holding LLC and its affiliates, as well as their respective officers, directors, members, managers, employees, and agents. This means the franchisee must protect these parties from losses, damages, and liabilities arising from the operation of the Embassy Suites By Hilton hotel.
However, the franchisee does not have to indemnify an Indemnified Party if a court determines via a final, non-appealable judgment that the damages were solely the result of the gross negligence or willful misconduct of that Indemnified Party. This exception does not apply if the claims against Hilton Franchise Holding LLC or any other Indemnified Party are based on theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or Hilton Franchise Holding LLC's failure to compel the franchisee to comply with the franchise agreement.
The franchisee must provide written notice to Hilton Franchise Holding LLC of any action, suit, proceeding, claim, demand, inquiry, or investigation involving an Indemnified Party within five days of becoming aware of it. Hilton Franchise Holding LLC has the option to defend the Indemnified Parties. If the franchisee fails to do so, Hilton Franchise Holding LLC may elect to assume the defense at the franchisee's expense and risk. The obligation to indemnify the Indemnified Parties survives the expiration or termination of the Franchise Agreement.