According to the Crowne Plaza agreement, who are the intended beneficiaries of the agreement?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary set forth in the above License Agreement ("License"), the following provisions shall supersede and apply to each License for an Crowne Plaza, Crowne Plaza Suites, and Crowne Plaza Resort issued in the State of California:
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- In accordance with the provisions under the U.S. Bankruptcy Code (11 U.S.C.A. Sec. 101 et seq.), paragraphs 11.C(1)(b) and (d) of the License shall be amended to include the following language: "Enforceability of this provision is a matter governed by the US Bankruptcy Code and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction."
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- California Business and Professions Code Sections 20000 through 20043 provide rights to the Licensee concerning termination or non-renewal of a License. If the License contains a provision that is inconsistent with the law, the law will control.
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- The License contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable,
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- The License and Guaranty require application of the laws of Georgia. In accordance with 5050.23 Sec. 310.114.1(c)(5)(B)(v), this provision may not be enforceable under California law.
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- With respect to franchises sold in California, a franchisor is prohibited from modifying a franchise agreement, or requiring a general release, in exchange for any assistance related to a declared state or federal emergency.
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- This Amendment may be executed in counterparts, which together shall constitute one and the same instrument. Signatures via Conga Sign, DocuSign, .PDF file, facsimile, or other electronic format have the same force and effect as originals.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
Based on the 2025 Crowne Plaza Franchise Disclosure Document, the amendments to the Holiday Hospitality Franchising, LLC License Agreement aim to protect franchisees by ensuring compliance with state-specific franchise laws. These amendments outline the rights and limitations of both the franchisor and franchisee, particularly concerning issues such as termination, non-renewal, and dispute resolution. The beneficiaries of these amendments are primarily the Crowne Plaza franchisees operating in specific states like California, Maryland, North Dakota, Washington, Rhode Island, Virginia, and Hawaii, as the amendments ensure that the franchisees' rights are protected under the franchise laws of their respective states.
For instance, the amendment for California states that if the License contains a provision inconsistent with California Business and Professions Code Sections 20000 through 20043, the law will control, thereby protecting the franchisee's rights concerning termination or non-renewal. Similarly, the amendment for Washington ensures that the provisions of the Washington Franchise Investment Protection Act prevail over any inconsistent terms in the franchise disclosure document or license agreement. These state-specific amendments collectively aim to create a fairer and more legally sound relationship between Crowne Plaza and its franchisees.
These amendments also address specific legal aspects such as the enforceability of non-compete agreements, waivers of rights, and the application of state laws in the event of conflicts. For example, in Washington, noncompetition covenants are void and unenforceable against an employee or independent contractor of a licensee unless their earnings exceed certain thresholds ($100,000 for employees and $250,000 for independent contractors, adjusted annually for inflation). This ensures that franchisees are not unduly restricted in their ability to hire or contract with individuals.
In summary, while the franchise agreement itself establishes the contractual relationship, these state-specific amendments act as safeguards to protect Crowne Plaza franchisees by aligning the agreement with local laws and regulations. Prospective franchisees should carefully review the amendments applicable to their state to fully understand their rights and obligations under the franchise agreement.