How does Crowne Plaza assess goodwill for impairment?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee specifically agrees and acknowledges that IHG owns or is licensed to use the name and mark "Crowne Plaza®" and all other Marks, as defined in paragraph 6.B. below, and other elements associated with the Brand System or derived therefrom (including but not limited to domain names or other identifications or elements used in electronic commerce), together with the goodwill symbolized thereby, and that Licensee will not contest, directly or indirectly, the validity or ownership of the Marks or take any other action in derogation of such validity or ownership either during the term of this License or after its termination. All improvements, modifications and additions whenever made to or associated with the Brand System by the parties hereto or anyone else, and all service marks, trademarks, copyrights, and service mark, trademark, domain name or similar registrations at any time used, applied for or granted in connection with the Brand System, and all goodwill arising from Licensee's use of IHG's Marks and other intellectual property, including (without limitation) local goodwill, shall inure to the benefit of and become the property of IHG. Upon expiration or termination of this License, no monetary amount shall be assigned as attributable to any goodwill associated with Licensee's use of the Brand System or any element(s) or component(s) of the Brand System including any trademarks or service marks licensed hereunder.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
The 2025 Crowne Plaza Franchise Disclosure Document addresses goodwill associated with the brand. It states that IHG (InterContinental Hotels Group) owns the goodwill associated with the Crowne Plaza brand and system. As a franchisee, you acknowledge IHG's ownership and agree not to contest it. All goodwill arising from your use of IHG's marks and intellectual property, including local goodwill, benefits IHG and becomes their property. This means that any positive brand recognition or customer loyalty you build by operating as a Crowne Plaza ultimately belongs to IHG.
Upon the expiration or termination of your Crowne Plaza license, the agreement specifies that no monetary amount will be assigned to any goodwill associated with your use of the Crowne Plaza brand. In other words, you will not be compensated for any goodwill you have built up during the term of your franchise agreement. This is a crucial point for prospective franchisees to understand, as it means that the value of the business you've built is not considered an asset that you can be reimbursed for when the franchise ends.
This arrangement is typical in many franchise systems, where the brand's value and reputation are considered the franchisor's core assets. The franchisee benefits from using the established brand and system during the franchise term, but the goodwill remains with the franchisor. Therefore, when evaluating a Crowne Plaza franchise, it's important to consider the potential for building a valuable business that you can later sell, keeping in mind that the goodwill associated with the Crowne Plaza brand will revert back to IHG upon termination or expiration of the license.
While the FDD clarifies the ownership of goodwill, it does not detail the specific methods IHG uses to assess the overall brand's goodwill for impairment on their own financial statements. This type of assessment would be more relevant to IHG's internal accounting practices rather than the franchisee's operations.