Are the purchasing and supply arrangements for Springhill Suites By Marriott limited in duration?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
The purchasing and supply arrangements described in Item 8 are limited in duration. The terms of these arrangements (including the basis for rebates and commissions payable to us) may be renegotiated periodically.
The arrangements described in this Item 8 are of a limited duration and may be renegotiated or discontinued at any time. The amount of revenue we derive and the manner in which we use the revenue is also subject to change.
We estimate that the cost of purchases and leases that you must make through us, our affiliates, approved suppliers, or subject to our standards and specifications will represent approximately: (i) 70% to 92% of the total cost of purchases and leases you will incur to establish a typical SpringHill Suites by Marriott hotel, excluding the cost of real estate1 ; and (ii) 46% to 60% of the total cost of purchases and leases you will incur to operate a typical SpringHill Suites by Marriott hotel2 on an annual basis.
Source: Item 5 — Other Related Party Transactions (FDD pages 75–78)
What This Means (2025 FDD)
According to Springhill Suites By Marriott's 2025 Franchise Disclosure Document, the purchasing and supply arrangements described in Item 8 are limited in duration. The terms of these arrangements, including the basis for rebates and commissions payable to Springhill Suites By Marriott, may be renegotiated periodically. This means that the agreements a franchisee enters into with approved suppliers are not permanent and can change over time.
This has a few implications for prospective franchisees. First, the pricing and terms offered by suppliers could change, potentially affecting the franchisee's operating costs and profitability. Second, Springhill Suites By Marriott could renegotiate the rebates and commissions it receives, which might indirectly impact franchisees. It is important to note that the arrangements described in Item 8 are of a limited duration and may be renegotiated or discontinued at any time. The amount of revenue Springhill Suites By Marriott derives and the manner in which it uses the revenue is also subject to change.
Additionally, the FDD states that the cost of purchases and leases made through Springhill Suites By Marriott, its affiliates, or approved suppliers represents a significant portion of the franchisee's expenses. Specifically, these purchases account for approximately 70% to 92% of the total cost to establish a typical SpringHill Suites by Marriott hotel (excluding real estate) and 46% to 60% of the total cost to operate the hotel annually. Given the magnitude of these expenses, changes to purchasing arrangements could have a substantial impact on a franchisee's financial performance. Therefore, it is crucial for potential franchisees to carefully consider these factors and discuss them with Springhill Suites By Marriott during their due diligence process.