What authorization does Crowne Plaza have regarding debits and credits to a franchisee's Settlement Account?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
To the extent the Automated Clearing House ("ACH") settlement process is used to effect debits or credits to your Settlement Account, you agree to be bound by the terms of the operating rules of the National Automated Clearing House Association, as in effect from time to time.
You hereby authorize us to initiate credit and debit entries and adjustments to your Settlement Account through the ACH network and/or through direct instructions to the financial institution where your Settlement Account is maintained for amounts due under the Agreement (including any amounts due under this Section 6) and under any agreements with us or our respective Affiliates for any product or services, as well as for any credit entries in error.
You hereby authorize the financial institution where your Settlement Account is maintained to effect all such debits and credits to your account.
The ACH authorization under this Section 6.3 will remain in effect until (a) you have provided us at least 30 days' prior written notice in accordance with Section 19.3 that you are terminating the authorization, and (b) either (i) all amounts due from you under the Agreement and under any other agreements you have with us or our Affiliates have been paid in full, or (ii) you have provided us an authorization to debit via ACH a replacement Settlement Account that is satisfactory to us in our sole discretion.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, franchisees authorize the company to manage their Settlement Accounts through Automated Clearing House (ACH) transactions. This authorization allows Crowne Plaza to initiate both credit and debit entries to the franchisee's Settlement Account for amounts due under the franchise agreement, including fees for products and services, as well as corrections for any errors. The franchisee also authorizes their financial institution to process these debits and credits.
This ACH authorization remains in effect until the franchisee provides at least 30 days' written notice of termination and either all outstanding amounts are paid in full, or a satisfactory replacement Settlement Account is authorized. This means Crowne Plaza has the power to directly debit the franchisee's account for ongoing fees, services, and any other financial obligations outlined in the agreement.
This arrangement is fairly standard in franchising, as it provides a streamlined method for collecting royalties, marketing fees, and other charges. However, it's crucial for a prospective Crowne Plaza franchisee to understand the implications of granting such broad access to their bank account and to carefully monitor their Settlement Account for any discrepancies. Franchisees should also be aware of the conditions required to terminate this authorization, ensuring they can switch accounts if needed.