What activities are included in the 'Services' that Crowne Plaza franchisees receive under the agreement?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's business comprises the franchising of hotels and resorts primarily under the following brands: Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Hotel Indigo, EVEN Hotels, avid hotels, voco, Vignette Collection, Atwell Suites and Garner.
Under franchise agreements, the Company's performance obligation is to provide a license to use the Company's trademarks and other intellectual property. Franchise royalty fees are typically charged as a percentage of hotel gross rooms revenues and are treated as variable consideration, recognized as the underlying hotel revenues occur. Franchise royalty fees also include any liquidated damage settlements the Company receives from franchisees that terminate arrangements prior to expiration.
Application and re-licensing fees are not considered to be distinct from the franchise service and are recognized over the life of the related contract.
Local and regional marketing programs and related activities may be conducted by Licensee, but only at Licensee's expense and subject to IHG's requirements and the Standards. Reasonable charges may be made for optional advertising materials ordered or supplied by IHG to Licensee for such programs and activities.
(7) Crowne Plaza Hotel Marketing Association. A fee in an amount equal to $3.00 per room, per month for mandatory participation in the Crowne Plaza Hotel Marketing Association. This amount is subject to change from time to time by the Crowne Plaza Hotel Marketing Association. Said fees shall be invoiced in advance, but paid in arrears along with all invoiced fees.
IHG may, at its election at any time during the License Term, require Licensee to pay all outstanding fees by electronic funds transfer, direct account debit, ACH or other similar technology designed to accomplish the same purpose as may be designated by IHG. If IHG requires Licensee to make payments by any of the foregoing methods, Licensee agrees to make its payment in compliance with those
requirements and also to deposit and maintain at all times sufficient funds to cover all fees and payments that Licensee owes to IHG and its Affiliates in a segregated bank account that Licensee establishes and maintains for the Hotel.
Licensee will operate the Hotel so as to maximize Gross Rooms Revenue of the Hotel consistent with sound marketing and industry practice and will not engage in any conduct that reduces Gross Rooms Revenue of the Hotel in order to further other business activities. Charges may be made for optional products or services accepted by Licensee from IHG, either in accordance with current practice or as developed in the future.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the company's performance obligation under franchise agreements is to provide a license to use the company's trademarks and other intellectual property. Franchise royalty fees are typically charged as a percentage of hotel gross rooms revenues and are treated as variable consideration, recognized as the underlying hotel revenues occur. Franchise royalty fees also include any liquidated damage settlements the Company receives from franchisees that terminate arrangements prior to expiration. Application and re-licensing fees are not considered to be distinct from the franchise service and are recognized over the life of the related contract.
Crowne Plaza franchisees also benefit from local and regional marketing programs, although these are conducted at the franchisee's expense and are subject to IHG's requirements and standards. Franchisees may be charged for optional advertising materials ordered or supplied by IHG for these programs. Franchisees are also required to participate in the Crowne Plaza Hotel Marketing Association, with a fee of $3.00 per room, per month, which is subject to change.
IHG, at its election, may require franchisees to pay all outstanding fees by electronic funds transfer, direct account debit, ACH, or other similar technology. Franchisees are required to operate the hotel to maximize Gross Rooms Revenue and must not engage in any conduct that reduces Gross Rooms Revenue to further other business activities. Charges may be made for optional products or services accepted by franchisees from IHG.