What constitutes a 'Material Change' in the nature of the business that a Crowne Plaza franchisee must report?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
A. The Hotel.
The Hotel comprises all structures, facilities, appurtenances, furniture, fixtures, equipment, entry and exit rights, parking, pools, landscaping and other areas from time to time located on the land identified by Licensee to IHG in anticipation of this License, or located on any land from time to time approved by IHG for additions, signs or other facilities. The Hotel must include the facilities listed on Attachment "A" hereto. No change in the number of approved guest rooms or suites and no other significant change in the Hotel or in the manner in which the Hotel rooms and services are offered to the public (including timesharing and condominium hotel projects and other projects not involving short term stays by transient guests) may be made without IHG's written approval. Licensee represents that it is entitled to possession of the Hotel during the entire License Term without restrictions that would interfere with anything contemplated in this License. Throughout this License, the words "room" and "guest room" are intended to include the word "suites" unless otherwise indicated.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, a franchisee must obtain written approval from IHG (InterContinental Hotels Group) for any significant changes to the hotel or its operations. Specifically, changes to the number of approved guest rooms or suites require IHG's approval. Additionally, any other significant change in the hotel or in the manner in which the hotel rooms and services are offered to the public also necessitates written approval from IHG. This includes, but is not limited to, timesharing and condominium hotel projects, as well as other projects that do not involve short-term stays by transient guests.
This requirement ensures that the Crowne Plaza brand maintains consistent standards and quality across all its locations. By controlling changes to the hotel's structure, facilities, and service offerings, IHG can protect its brand image and customer expectations. Franchisees need to be aware that any deviation from the approved plan, especially those that alter the fundamental nature of the hotel's business model, must be pre-approved.
For a prospective Crowne Plaza franchisee, this means that any plans for expansion, renovation, or changes to the hotel's services must be carefully reviewed and submitted to IHG for approval. Failure to obtain this approval could result in a breach of the franchise agreement and potential penalties. It is crucial for franchisees to maintain open communication with IHG and to seek guidance on any proposed changes to ensure compliance with the franchise agreement.
This level of franchisor oversight is common in the hotel industry, where brand consistency is critical for attracting and retaining customers. Crowne Plaza's requirement for written approval of significant changes is a standard practice designed to protect the brand and ensure that all franchisees adhere to the established business model.