Who determines the amount of the Reserve Account for an Atwell Suites franchise, and can it be adjusted?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
us from time to time, in our sole discretion, based upon your processing history and the potential risk of loss to us as we may determine from time to time.
13.2 Funding the Reserve Account.
(a) Timing. The Reserve Account shall be fully funded: (i) immediately in instances of fraud, suspected fraud, the occurrence of an Event of Default, or any party providing notice of termination of the Agreement; or (ii) upon three days' notice if required for any other reason.
(b) Method. The Reserve Account may be funded by all or any combination of the following: (i) one or more debits to your Settlement Account or any other accounts held by either of us or any of our respective Affiliates, at any financial institution maintained in the name of Client, any of its principals, or any of its guarantors, or if any of same are authorized signers on such account; (ii) our collection of any payments or amounts (including settlement funds) otherwise due to you; or (iii) with our consent, your delivery to us of a letter of credit issued by a financial institution acceptable to us and in a form satisfactory to us.
(c) Holding and Return of Funds. Any Reserve Account will be held by us for the greater of ten (10) months after termination of the Agreement or for such longer period of time as is consistent with our liability for your Card transactions and Chargebacks in accordance with Card Organization Rules, at which time, we will return all remaining amounts in the Reserve Account to you.
We will hold funds pursuant to this Section 13.2 in master account(s) with your funds allocated to separate sub accounts.
Unless specifically required by law, you shall not be entitled to interest on any funds held by us in a Reserve Account.
- 13.3 Payment of Amounts from Reserve Account; Deficiencies. We may collect any Servicers Fees, Third Party Based Fees, Chargebacks, and other amounts (collectively in this Section 13.3, "all such amounts") arising in connection with the Agreement from the Reserve Account.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, the amount required for the Reserve Account is determined by the franchisor, IHG, and can be adjusted at their discretion. IHG determines the amount based on the franchisee's processing history and the potential risk of loss to IHG. This gives IHG significant control over the funds held in reserve.
This means that as an Atwell Suites franchisee, you may be required to maintain a Reserve Account, the size of which is subject to change based on IHG's assessment of risk. The Reserve Account can be funded through debits to your Settlement Account, collection of payments otherwise due to you, or a letter of credit acceptable to IHG. IHG holds these funds in a master account, allocating your funds to a separate sub-account.
The funds in the Reserve Account can be used by IHG to cover Servicers Fees, Third Party Based Fees, Chargebacks, and other amounts arising in connection with the franchise agreement. This protects IHG from potential financial losses but also means that funds you might otherwise use for your business operations could be tied up in the Reserve Account. You are not entitled to interest on any funds held in the Reserve Account, unless specifically required by law.
Any remaining amounts in the Reserve Account will be returned to you after the greater of ten months after termination of the Agreement or for such longer period of time as is consistent with IHG's liability for your Card transactions and Chargebacks in accordance with Card Organization Rules. As a prospective franchisee, it is important to understand the factors that could influence the size of your Reserve Account and how these funds will be managed by IHG during the term of your agreement.