Franchise Agreement and Other Agreements
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DOUBLETREE BY HILTON DOUBLETREE SUITES BY HILTON FRANCHISE DISCLOSURE DOCUMENT BRAZIL HILTON WORLDWIDE MANAGE LIMITED a Limited Company Formed Under the Laws of England and Wales Maple Court, Central Park, Reeds Crescent Watford, Hertfordshire, WD24 4QQ UK +44 207 856 8000 Dated: July 31, 2019 {018316-999987 00275530.DOCX; 1} 2019 Brazil DoubleTree TABLE OF CONTENTS PART I THE FRANCHISOR AND ITS RELATED COMPANIES.................................................. 1 PART II FINANCIAL STATEMENTS ...........................................................................................2 PART III LITIGATION ..................................................................................................................3 PART IV THE LICENSE ..............................................................................................................3 PART V THE IDEAL FRANCHISEE ............................................................................................ 3 PART VI OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS ..........................................................................................4 PART VII INITIAL FEES AND ESTIMATED INITIAL INVESTMENT ........................................... 5 PART VIII PERIODIC AND OTHER FEES ................................................................................ 12 PART IX FRANCHISEE INFORMATION .................................................................................. 26 PART X TERRITORY ............................................................................................................... 26 PART XI RESTRICTIONS ON SOURCES OF GOODS, SERVICES AND MATERIALS ........... 26 PART XII FRANCHISOR’S SERVICES .................................................................................... 30 PART XIII STATUS OF TRADEMARKS AND PATENTS BEFORE INPI ................................... 37 PART XIV CERTAIN OF FRANCHISEE’S RIGHTS AND OBLIGATIONS ON TERMINATION OR EXPIRATION .......................................................................... 39 PART XV FRANCHISE AGREEMENT AND OTHER AGREEMENTS ...................................... 40 Table of Exhibits Exhibit A List of Franchisees as of December 31, 2018 Exhibit B List of Franchisees Terminated, Canceled, Not Renewed or with Changes in Controlling Interest in 2018 Exhibit C Financial Statements Exhibit D Franchise Agreement and Addendum Exhibit D-1 Development Incentive Note Exhibit D-2 Eforea Spa Amendment Exhibit E Guaranty of Franchise Agreement Exhibit F Hotel Project Application Exhibit G Information Technology System Agreement (HITS Agreement) Exhibit H Receipts {018316-999987 00275530.DOCX; 1} 2019 Brazil DoubleTree PART I THE FRANCHISOR AND ITS RELATED COMPANIES To simplify the language in this Franchise Disclosure Document (“Disclosure Document”), “we” or “us” means Hilton Worldwide Manage Limited, the Franchisor. “You” means the person(s) who signs the Franchise Agreement, the Franchisee. If you are a corporation, partnership, limited liability company or other entity, “you” also includes both the business entity and its owners. Capitalized terms not defined in this Disclosure Document have the meaning set forth in the Franchise Agreement attached as Exhibit D. All dollar amounts stated in this Disclosure Document are US Dollars, unless stated otherwise. We are a limited company formed on December 7, 2010 under the laws of England and Wales, with registered 7462067. For the purpose of this offering, we do business under the name “DoubleTree.” Our principal business and registered office address is Maple Court, Central Park, Reeds Crescent, Watford, Hertfordshire, WD24 4QQ UK, and our telephone number is +44 207 856 8000. We became the franchisor of hotels which operate under the DoubleTree, DoubleTree by Hilton, DoubleTree Suites and DoubleTree Suites by Hilton brand (collectively, “DoubleTree Brand” or “Brand”) for all locations outside the United States of America, including the District of Columbia and its territories and possessions (“US”) in January 2018, except in Canada, China, Russia, and a limited number of other territories. Our parent company is Hilton Domestic Operating Company Inc., a Delaware corporation formed on July 12, 2016 (“Hilton”). Hilton’s parent company is Hilton Worldwide Holdings Inc., a Delaware corporation formed on March 18, 2010 (NYSE: HLT) (“Hilton Worldwide”). The principal business address of both companies is 7930 Jones Branch Drive, Suite 1100, McLean, Virginia 22102 USA. Hilton became our parent company on January 4, 2017, as the successor to our previous parent company, Park Hotels & Resorts, Inc. (“Park”). Together, Hilton and Park have conducted a guest lodging business since 1946. Park was originally called Hilton Hotels Corporation ("HHC") from May 29, 1946, to December 19, 2009. It changed its name to Hilton Worldwide, Inc. (“HWI”) on December 20, 2009, and to Park Hotels & Resorts Inc. on June 1, 2016. On January 4, 2017, Park became an independent company in a spin-off transaction. As a result of that spin-off, nearly all company-owned hotels were divested with Park. For convenience, all references to “Hilton” in this Disclosure Document include HHC, HWI, and Park during the relevant time frames for each, unless otherwise noted. We are also the franchisor outside the US for all of the other brands affiliated with Hilton Worldwide. Our immediate predecessor, Hilton Worldwide Franchising LP, a limited partnership formed under the laws of England and Wales with registered number LP015958 on March 12, 2014, was the franchisor of hotels which operate under the DoubleTree Brand for all locations outside the US from July 2014 through December 2017. Its predecessor as franchisor of the DoubleTree Brand hotels for all locations outside the US is Doubletree International Franchise LLC, a Delaware limited liability company formed in September 2007. From October 2007 through June 2014, Doubletree International Franchise LLC offered franchises for DoubleTree Brand hotels for all locations outside the US. Before that time, Doubletree Hotel Systems, Inc., an Arizona corporation formed in February 1989 (“DHSI”) offered licenses for DoubleTree Brand hotels in Canada, {018316-999987 00275530.DOCX; 1} 1 2019 Brazil DoubleTree Mexico, Central America, South America, and the Caribbean (collectively, “the Americas excluding the United States”) between February 1989 and October 2007. Hilton acquired DHSI’s indirect corporate parent and became the parent of DHSI and all its affiliates on December 1, 1999. Our affiliate, Hilton Franchise Holding LLC, a Delaware limited liability company formed in September 2007, has been the franchisor for the DoubleTree Brand in the US since March 30, 2015. Its immediate predecessor in offering the DoubleTree Brand in the US was Doubletree Franchise LLC, a Delaware limited liability company formed in September 2007 (“DTF”). DTF offered franchises under the DoubleTree Brand in the US from October 2007 through March 2015. DTF’s predecessor was Doubletree Hotel Systems, Inc., an Arizona corporation incorporated in February 1989 (“DHS”). DHS offered Doubletree hotel franchises from February 1989 to October 2007, and Doubletree Guest Suites franchises from 1995 to October 2007. DHS offered franchises under the Doubletree Club Hotel brand between 1995 and 2005. Hilton became the ultimate parent corporation of DHS and its affiliates on December 1, 1999. DHS assigned all of its franchise agreements governing DoubleTree hotels in the US to our affiliate, HLT Existing Franchise Holding LLC, a Delaware limited liability company, in October 2007. We have provided development and management services to selected hotels outside the US since July 2014, and will continue to do so in addition to our duties as the franchisor for all Hilton Worldwide Brands for all locations outside the US, except in Canada, Russia and a limited number of other territories. PART II FINANCIAL STATEMENTS A copy of our audited Strategic Report, Report of the Directors and Financial Statements for the year ended December 31, 2018 (the “Financial Statements”) is attached in Exhibit C. The Financial Statements compare fiscal years 2017 and 2018. A copy of our previous audited Strategic Report, Report of the Directors and Financial Statements for the year ended December 31, 2017 (the “Prior Financial Statements”) is also attached in Exhibit C. The Prior Financial Statements compare fiscal years 2016 and 2017. For fiscal year 2017, we restated our results due to changes in accounting standards as described in the Notes to the Financial Statements. This restatement resulted in a decrease in our reported total assets from $1,854,350,980 to $1,848,729,809. There was no change in our reported share capital. For fiscal year 2016, we reported both Turnover and Gross Profit over $400,000,000. We also reported an operating loss of $472,207,707 due to one-time events that included a group restructuring, an intercompany loan rationalization program, and a capital reduction (as summarized on Page 2 and detailed within the Financial Statements). We do not believe these one-time events have had any material effect on our ability to perform our obligations as the franchisor. {018316-999987 00275530.DOCX; 1} 2 2019 Brazil DoubleTree PART III LITIGATION We and our controlling companies are not involved in any pending litigation specifically questioning the franchising system or that might directly result in the inability to operate the franchise. PART IV THE LICENSE