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  • {018316-022430 00275532.DOCX; 1} 2019 Brazil Tapestry

    TAPESTRY COLLECTION 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

  • {018316-022430 00275532.DOCX; 1} 2019 Brazil Tapestry

    TABLE OF CONTENTS

    PART I THE FRANCHISOR AND ITS RELATED COMPANIES............................................ 1

    PART II FINANCIAL STATEMENTS ...................................................................................... 2

    PART III LITIGATION .............................................................................................................. 2

    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 ........................................ 4

    PART VIII PERIODIC AND OTHER FEES ...............................................................................12

    PART IX FRANCHISEE INFORMATION ................................................................................27

    PART X TERRITORY ............................................................................................................27

    PART XI RESTRICTIONS ON SOURCES OF GOODS, SERVICES AND MATERIALS ........28

    PART XII FRANCHISOR’S SERVICES ...................................................................................32

    PART XIII STATUS OF TRADEMARKS AND PATENTS BEFORE INPI ..................................39

    PART XIV CERTAIN OF FRANCHISEE’S RIGHTS AND OBLIGATIONS ON TERMINATION OR EXPIRATION.....................................................................................................41

    PART XV FRANCHISE AGREEMENT AND OTHER AGREEMENTS .....................................43

    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

  • {018316-022430 00275532.DOCX; 1} 1 2019 Brazil Tapestry

    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. 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 “Tapestry” brand in Brazil (“Tapestry Brand”). 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 number 7462067. For the purpose of this offering, we do business under the name “Tapestry.” 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 Tapestry brand for all locations outside the United States of America, including the District of Columbia and its territories and possessions (“US”) on January 1, 2018, except in Canada, China, Russia and a limited number of other territories. We are also the franchisor outside the US for all of the other brands affiliated with Hilton Worldwide. 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. Our immediate predecessor, Hilton Worldwide Franchising LP, (“HWF”), a limited partnership formed under the laws of England and Wales on March 12, 2014, with registered number LP015958, was the franchisor of hotels under the Tapestry Brand for all locations outside the US from December 2016 through December 2017. HWF has

  • {018316-022430 00275532.DOCX; 1} 2 2019 Brazil Tapestry

    remained the franchisor for Tapestry Brand hotels in Canada, Russia, and a limited number of other territories since January 2018. Our affiliate, Hilton Franchise Holding LLC, a Delaware limited liability company formed in September 2007 (“HFH”), has been the franchisor for Tapestry Brand hotels in the US since December 2016. Both HWF and HFH also currently offer franchises for the other Hilton Worldwide Brands below. Hilton Worldwide, through its subsidiaries, currently owns the following principal marks and their related guest lodging systems: Hilton™, Canopy™, Conrad™, Curio™, DoubleTree™, Embassy™, Hampton™, Hilton Garden Inn™, Home2™, Homewood™, Motto™, LXR™, Signia Hilton™, Tapestry™, Tru™, Waldorf Astoria™ (the “Hilton Worldwide Brands”). The Hilton Worldwide Brands may utilize name variations for suites hotels and may use the taglines “by Hilton” or “Collection by Hilton” in some markets or locations. The Hilton Worldwide Brands may have trademark registrations currently pending in some markets or locations.

    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, China, 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.

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    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

    We franchise the non-exclusive right to use the Tapestry System (“System”) in connection with the operation of a Tapestry Brand hotel in Brazil. The System consists of the elements, including the knowhow, we periodically designate to identify hotels operating worldwide under the Brand and currently inc

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