Who is authorized to establish the Reserve Account for a Crowne Plaza franchise?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
IHG may require Licensee to establish a capital reserve ("Capital Reserve") in an amount not in excess of 5% of Gross Revenue annually to be used for capital expenditures and the upgrading of the Hotel, including the renovation of public areas, guest rooms, guest room corridors, and the replacement of FF&E.
IHG shall give Licensee no less than ninety (90) days' notice of imposing such requirement to establish a Capital Reserve, as the same may be established or changed by IHG from time to time.
In such event, Licensee must establish a Capital Reserve account funded monthly in a bank selected by Licensee.
Licensee shall make expenditures from such account for the purposes hereinbefore specified in accordance with IHG's requirements.
Licensee acknowledges that the Capital Reserve may not be sufficient to maintain the Hotel as a first-class facility in accordance with th
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, IHG (InterContinental Hotels Group) has the authority to require a franchisee to establish a capital reserve. This reserve is capped at 5% of the hotel's gross revenue annually. The funds within this reserve are specifically designated for capital expenditures and upgrades to the hotel property. These upgrades include renovations to public areas, guest rooms, corridors, and the replacement of furniture, fixtures, and equipment (FF&E).
IHG must provide the Crowne Plaza franchisee with at least 90 days' notice before requiring the establishment of a capital reserve or modifying the requirements for the reserve. Once notified, the franchisee is responsible for establishing a capital reserve account at a bank of their choosing. The account must be funded on a monthly basis.
The franchisee is obligated to make expenditures from the capital reserve account according to IHG's requirements and for the purposes specified by IHG. The FDD also states that the franchisee acknowledges that the capital reserve may not be sufficient to maintain the hotel as a first-class facility.