Hilton Garden Inns International Franchise Llc
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HILTON GARDEN INNS INTERNATIONAL FRANCHISE LLC FRANCHISE DISCLOSURE DOCUMENT (CANADA) IMPORTANT NOTICE This Disclosure Document is provided to you in accordance with Alberta, Ontario, New Brunswick and Prince Edward Island laws. The provision of this Disclosure Document and/or the submission by you of personal and credit information is in no way to be taken or construed as an agreement. An agreement can only arise upon the execution of the requisite Franchise Agreement by the parties thereto, following the mandatory fourteen (14) day waiting period. The information in this Disclosure Document, including any exhibits, is the confidential property of Hilton Worldwide, Inc. and its subsidiaries. This Disclosure Document is being provided to you for your bona fide use in considering the purchase of a Franchise to operate a Hilton Garden Inn hotel business and for no other reason. Any other use, copying or disclosure is strictly prohibited. Version Date: July 7, 2011 {000011-999987 00179680.DOCX; 2} July 2011 HGI (Canada) REQUIRED STATEMENTS (ONTARIO RESIDENTS ONLY) The following paragraphs are required by the Arthur Wishart Act (Franchise Disclosure), 2000 to be included in this document. 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. REQUIRED STATEMENTS (PRINCE EDWARD ISLAND RESIDENTS ONLY) 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. 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. REQUIRED STATEMENTS (NEW BRUNSWICK LOCATIONS ONLY) Risk Warnings 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. 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. {000011-999987 00179680.DOCX; 2} July 2011 HGI (Canada) TABLE OF CONTENTS ARTICLE 1 BUSINESS BACKGROUND OF THE FRANCHISOR .......................................................... 1 ARTICLE 2 KEY PERSONNEL ................................................................................................................ 4 ARTICLE 3 CONVICTIONS, CHARGES, JUDGMENTS AND ORDERS ................................................ 7 ARTICLE 4 BANKRUPTCY .................................................................................................................... 14 ARTICLE 5 FINANCIAL STATEMENTS ................................................................................................ 15 ARTICLE 6 INITIAL FRANCHISE FEES AND OTHER FEES ............................................................... 15 ARTICLE 7 OTHER COSTS OF ESTABLISHING THE FRANCHISE ................................................... 30 ARTICLE 8 ANNUAL OPERATING COSTS .......................................................................................... 36 ARTICLE 9 FINANCIAL PERFORMANCE REPRESENTATIONS ........................................................ 36 ARTICLE 10 FINANCING ARRANGEMENTS ......................................................................................... 40 ARTICLE 11 TRAINING AND ASSISTANCE ........................................................................................... 41 ARTICLE 12 ADVERTISING INFORMATION .......................................................................................... 45 ARTICLE 13 ADMINISTRATION OF THE MONTHLY PROGRAM FEE ................................................. 47 ARTICLE 14 RESTRICTIONS AND REQUIREMENTS ON PURCHASE AND SALE OF GOODS AND SERVICES ................................................................................................... 48 ARTICLE 15 REBATES ............................................................................................................................ 53 ARTICLE 16 TRADEMARKS AND COMMERCIAL SYMBOLS ............................................................... 53 ARTICLE 17 LICENSES, PERMITS AND AUTHORIZATIONS ............................................................... 55 ARTICLE 18 PERSONAL PARTICIPATION IN THE FRANCHISED BUSINESS ................................... 56 ARTICLE 19 TERRITORY ........................................................................................................................ 57 ARTICLE 20 INFORMATION ON OTHER FRANCHISEES .................................................................... 60 ARTICLE 21 AGREEMENTS RELATING TO THE FRANCHISE ............................................................ 61 ARTICLE 22 TERMINATION, RENEWAL AND TRANSFER ................................................................... 61 ARTICLE 23 ALTERNATIVE DISPUTE RESOLUTION (APPLICABLE ONLY IN THE PROVINCE OF ONTARIO) ................................................................................................. 67 ARTICLE 24 NOTICE OF RECISSION AND EFFECT OF CANCELLATION IN ALBERTA (APPLICABLE ONLY IN THE PROVINCE OF ALBERTA) ................................................. 68 ARTICLE 25 RIGHT OF ACTION FOR DAMAGES IN ALBERTA (APPLICABLE ONLY IN THE PROVINCE OF ALBERTA) ................................................................................................. 69 ARTICLE 26 ADDITIONAL DISCLOSURE APPLICABLE IN NEW BRUNSWICK PROVINCE ONLY ................................................................................................................................... 66 ARTICLE 27 RECEIPT BY FRANCHISEE ............................................................................................... 69 TABLE OF EXHIBITS Franchise License Agreement (with Rider and Attachment A) ........................................................ Exhibit A Development Incentive Promissory Note ..................................................................................... Exhibit A-1 Computer System Agreements (HITS Agreement/HSIA Agreement) ............................................. Exhibit B Franchise Application ..................................................................................................................... Exhibit C Guarantee of Franchise License Agreement .................................................................................. Exhibit D List of Current Franchisees .............................................................................................................. Exhibit E List of Terminated Franchisees ........................................................................................................ Exhibit F Voluntary Termination Agreement .................................................................................................. Exhibit G Financial Statements ....................................................................................................................... Exhibit H Manual Table of Contents ................................................................................................................. Exhibit I Receipt ............................................................................................................................................. Exhibit J {000011-999987 00179680.DOCX; 2} i July 2011 HGI (Canada) ARTICLE 1 BUSINESS BACKGROUND OF THE FRANCHISOR 1.1 The Licensor To simplify the language in this Disclosure Document, “we” or “us” means Hilton Garden Inns International Franchise LLC, the licensor and/or the franchisor. “You” means the person (or persons) who signs the Franchise License Agreement – the “licensee” and/or “franchisee.” If the licensee will be a corporation, partnership, limited liability company or other entity, “you” also includes both the business entity and its owners. The “Licensed 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 “Hilton Garden Inns” Licensed Brand in Canada. We are a Delaware limited liability company formed in September 2007. We do business under the name "Hilton Garden Inns". Our principal business address since August 1, 2009 has been 7930 Jones Branch Drive, Suite 1100, McLean, Virginia 22102 and