How does Crowne Plaza allocate payments in a contract that contains both lease and non-lease components?

According to Crowne Plaza's 2025 Franchise Disclosure Document, when a contract contains both lease and non-lease elements, Crowne Plaza allocates payments within the contract. This indicates that the franchise agreement may involve situations where a franchisee is paying for both the right to use an asset (lease component) and for other services or items that are not related to the lease of an asset (non-lease component).

For a prospective Crowne Plaza franchisee, this means that the total payment they make to the franchisor might cover various aspects beyond just the lease of property or equipment. It is important for franchisees to understand how these payments are allocated because it can affect the accounting treatment of these expenses and potentially impact their tax obligations.

Franchisees should carefully review the franchise agreement and any related exhibits to fully understand the breakdown of payments between lease and non-lease components. If the allocation is not clearly defined, franchisees should seek clarification from Crowne Plaza to ensure they accurately record and report these expenses for financial and tax purposes.