What constitutes an Event of Default related to irregular card sales for a Crowne Plaza franchise?

According to Crowne Plaza's 2025 Franchise Disclosure Document, an Event of Default includes "Irregular Card sales by you, excessive Chargebacks, or any other circumstances which, in our sole discretion, may increase our exposure for your Chargebacks or otherwise present a financial or security risk to us." This means that if a Crowne Plaza franchisee engages in unusual credit card processing activities, incurs a high number of chargebacks, or takes actions that increase the franchisor's financial risk related to chargebacks, it can be considered a default of the franchise agreement.

This clause gives Crowne Plaza broad discretion to determine what constitutes an Event of Default related to card sales. The terms "irregular card sales" and "excessive Chargebacks" are not specifically defined, which means Crowne Plaza has the power to interpret these terms. This could create uncertainty for franchisees, as they may not know exactly what actions could trigger a default.

For a prospective franchisee, this highlights the importance of maintaining sound financial practices and closely monitoring credit card transactions to avoid potential issues with chargebacks or activities that could be perceived as irregular. It would be prudent to seek clarification from Crowne Plaza during the due diligence process regarding specific thresholds or examples of activities that would be considered "irregular card sales" or "excessive Chargebacks" to better understand the potential risks.