Hilton Worldwide Franchising Lp Canopy Canopy by Hilton
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HILTON WORLDWIDE FRANCHISING LP CANOPY CANOPY BY HILTON FRANCHISE DISCLOSURE DOCUMENT CANADA Version Date: June 30, 2017, as amended January 1, 2018 June 30, 2017, as amended January 1, 2018 Canada Canopy IMPORTANT NOTICE If you are entitled to receive this Disclosure Document under the laws of the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Ontario, or Prince Edward Island (“Disclosure Provinces”), then this Disclosure Document has been provided to you under the Alberta Franchises Act, the British Columbia Franchises Act, Manitoba’s The Franchises Act, the New Brunswick Franchises Act, the Ontario Arthur Wishart Act (Franchise Disclosure), 2000, or the Prince Edward Island Franchises Actor (the "Acts"), respectively, and we will observe the applicable waiting period after delivery of this Disclosure Document. The certificates of our officers that are required by various Disclosure Provinces are attached to this Disclosure Document after Article 29. If you reside in a province other than the Disclosure Provinces, or if you reside in a Disclosure Province but are subject to an exemption or exclusion under the Acts from the entitlement to receive a Disclosure Document, then we have provided this Disclosure Document to you for informational purposes only, and on a voluntary basis. The information in this Disclosure Document has been prepared pursuant to the laws of the Disclosure Provinces for distribution to prospective franchisees in those provinces who we are required to provide it to pursuant to the Acts. Accordingly, some of the information contained in the Disclosure Document is specific to prospective franchisees in one or more of the Disclosure Provinces only and, as a result, may not be correct for you or applicable to the operation of a franchise in your area. You are encouraged to make your own investigations to ensure the accuracy of the information. If the Hotel is or will be located in the province of Quebec, please see Article 28 for certain information that applies only to Hotels located in Quebec. Statements Required by Ontario’s Arthur Wishart Act (Franchise Disclosure), 2000 1. A commercial credit report is a report which may include information on the franchisor’s business background, banking information, credit history and trade references. Such reports may be obtained from private credit reporting companies and may provide information useful in making an investment decision. 2. Independent legal and financial advice in relation to the franchise agreement should be sought prior to entering into the franchise agreement. 3. A prospective franchisee is strongly encouraged to contact any current or previous franchisees prior to entering into the franchise agreement. 4. The cost of goods and services acquired under the franchise agreement may not correspond to the lowest cost of the goods and services available in the marketplace. Statements Required by British Columbia’s Franchises Act, Manitoba’s The Franchises Act, New Brunswick’s Franchises Act, and Prince Edward Island’s Franchises Act 1. A prospective franchisee should seek information on the franchisor and on the franchisor’s business background, banking affairs, credit history and trade references. 2. A prospective franchisee should seek expert independent legal and financial advice in relation to franchising and the franchise agreement prior to entering into the franchise agreement. June 30, 2017, as amended January 1, 2018 Canada Canopy 3. A prospective franchisee should contact current and previous franchisees prior to entering into the franchise agreement. 4. Lists of current and previous franchisees and their contact information can be found in this disclosure document. June 30, 2017, as amended January 1, 2018 Canada Canopy TABLE OF CONTENTS ARTICLE 1 BUSINESS BACKGROUND OF THE FRANCHISOR ....................................................... 1 ARTICLE 2 BUSINESS EXPERIENCE ................................................................................................. 4 ARTICLE 3 CONVICTIONS, CHARGES, JUDGEMENTS AND ORDERS .......................................... 8 ARTICLE 4 BANKRUPTCY ................................................................................................................. 13 ARTICLE 5 FINANCIAL STATEMENTS ............................................................................................. 13 ARTICLE 6 INITIAL FRANCHISE FEES AND OTHER FEES ............................................................ 13 ARTICLE 7 OTHER COSTS OF ESTABLISHING THE FRANCHISE ................................................ 27 ARTICLE 8 ANNUAL OPERATING COSTS ....................................................................................... 32 ARTICLE 9 FINANCIAL PERFORMANCE REPRESENTATIONS ..................................................... 32 ARTICLE 10 FINANCING ARRANGEMENTS ...................................................................................... 32 ARTICLE 11 TRAINING AND ASSISTANCE ....................................................................................... 33 ARTICLE 12 ADVERTISING INFORMATION ...................................................................................... 36 ARTICLE 13 ADMINISTRATION OF THE MONTHLY PROGRAM FEE .............................................. 38 ARTICLE 14 RESTRICTIONS AND REQUIREMENTS ON PURCHASE AND SALE OF GOODS AND SERVICES ....................................................................................................................... 39 ARTICLE 15 REBATES ........................................................................................................................ 43 ARTICLE 16 TRADEMARKS AND COMMERCIAL SYMBOLS ........................................................... 44 ARTICLE 17 LICENSES, PERMITS AND AUTHORIZATIONS ............................................................ 46 ARTICLE 18 PERSONAL PARTICIPATION IN THE FRANCHISED BUSINESS, INCLUDING SECURITY INTERESTS AND PERSONAL GUARANTIES ............................................ 50 ARTICLE 19 TERRITORY .................................................................................................................... 52 ARTICLE 20 INFORMATION ON OTHER FRANCHISEES ................................................................. 55 ARTICLE 21 AGREEMENTS RELATING TO THE FRANCHISE ......................................................... 56 ARTICLE 22 TERMINATION, RENEWAL AND TRANSFER ............................................................... 56 ARTICLE 23 ALTERNATIVE DISPUTE RESOLUTION (APPLICABLE ONLY IN THE PROVINCE OF ONTARIO) ........................................................................................................................ 62 ARTICLE 24 NOTICE OF RESCISSION AND EFFECT OF CANCELLATION IN ALBERTA (APPLICABLE ONLY IN THE PROVINCE OF ALBERTA).............................................. 62 ARTICLE 25 RIGHT OF ACTION FOR DAMAGES IN ALBERTA (APPLICABLE ONLY IN THE PROVINCE OF ALBERTA) .............................................................................................. 63 ARTICLE 26 ADDITIONAL DISCLOSURE APPLICABLE IN NEW BRUNSWICK PROVINCE ONLY 63 ARTICLE 27 ADDITIONAL DISCLOSURE APPLICABLE IN MANITOBA PROVINCE ONLY ............ 63 ARTICLE 28 ADDITIONAL DISCLOSURE APPLICABLE IN QUEBEC PROVINCE ONLY ................ 64 ARTICLE 29 RECEIPT BY FRANCHISEE ........................................................................................... 69 TABLE OF EXHIBITS EXHIBIT A Franchise Agreement and Addendum EXHIBIT A-1 Development Incentive Note EXHIBIT B Information Technology System Agreement (HITS Agreement) EXHIBIT B-1 Information Technology System Agreement (HITS Agreement) for Quebec EXHIBIT C Franchise Application EXHIBIT D Guaranty of Franchise Agreement EXHIBIT E List of Current Franchisees EXHIBIT F List of Former Franchisees EXHIBIT G Financial Statements of Hilton Worldwide Franchising LP EXHIBIT G-1 Financial Statements of Hilton Worldwide Manage Limited EXHIBIT H Table of Contents – Brand Standards Manual EXHIBIT I Lender Comfort Letter Forms EXHIBIT J Receipt June 30, 2017, as amended January 1, 2018 Canada Canopy ARTICLE 1 BUSINESS BACKGROUND OF THE FRANCHISOR 1.1 The Franchisor To simplify the language in this Disclosure Document, “we” or “us” means Hilton Worldwide Franchising LP. “You” means the person(s) who signs the Franchise Agreement. If you are a business entity, “you” includes the business entity and its owners. The “Brand” refers to the name or names under which we will license you to operate a hotel. This Disclosure Document describes our franchise licenses for hotels which will operate under the “Canopy” or “Canopy by Hilton” Brand in Canada. Capitalized words not defined in this Disclosure Document have the meaning set forth in the Franchise Agreement. We are a limited partnership formed on March 12, 2014, under the laws of England and Wales, with registered number LP015958. Our principal business address is Maple Court, Central Park, Reeds Crescent, Watford, Hertfordshire WD24 4QQ UK and our telephone number is +44 207 856 8000. In connection with the offer of this franchise, we do business under the names "Canopy" and "Canopy by Hilton.” We became the franchisor of hotels which operate under the Canopy Brand for all locations outside the United States of America, including the District of Columbia and its territories and possessions (“US”) in October 2014. Our parent company is Hilton Domestic Operating Company Inc., a Delaware corporation formed on July 12, 2016 (“Hilton”). Hilton’s parent