What were the advertising costs recognized by Crowne Plaza within 'General and administrative expenses' on the consolidated statements of net income for the year ended December 31, 2022?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
ed discounted future cash flows.
Contract costs
Certain costs incurred to secure management and franchise agreements, typically developer commissions, are capitalized and are amortized over the initial term of the related contract. These costs are presented as 'Contract costs' in the consolidated balance sheets.
Notes to Consolidated Financial Statements (continued)
1. Description of the Business and Summary of Significant Accounting Policies (continued)
Contract costs are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable with reference to the future expected cash flows from the contract. If the estimated undiscounted cash flows are less than carrying value, an impairment loss is charged to the consolidated statement
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the company recognized advertising costs of $8.5 million for the year ended December 31, 2022. This amount was specifically recognized within 'General and administrative expenses' on the consolidated statements of net income.
In addition to the advertising costs recognized within general and administrative expenses, Crowne Plaza also charged advertising costs to the System Fund. For the year ended December 31, 2022, $278.5 million was charged to the System Fund and is included in 'System Fund and reimbursable expenses' on the consolidated statements of net income.
For a prospective franchisee, it's important to understand the breakdown of these advertising expenses. The $8.5 million represents advertising costs directly recognized by the company, while the $278.5 million reflects advertising funded through the System Fund, which franchisees typically contribute to. This distinction is crucial for assessing the overall marketing efforts and how they are financed.