What constitutes an 'Unauthorized Transfer' that could lead to immediate termination of the Crowne Plaza license?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) If a change of ownership application for the proposed new owner is either (a) not submitted or (b) not approved by IHG, and the conveyance of the Hotel, Hotel site, or any Equity Interest in the Hotel or Equity Interest in Licensee to the proposed new owner occurs, then such transfer shall be considered an unauthorized transfer (an "Unauthorized Transfer"). If an Unauthorized Transfer occurs, it shall constitute a material breach of this License and an abandonment by Licensee of the franchise, and IHG shall be entitled to exercise all of its remedies under this License and applicable law, including, without limitation, its right to terminate this License pursuant to paragraph 11.C hereof.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, an 'Unauthorized Transfer' occurs when a change of ownership application is either not submitted to IHG (InterContinental Hotels Group) or is not approved by IHG, yet the conveyance of the Hotel, Hotel site, or any Equity Interest in the Hotel or Equity Interest in Licensee proceeds to the proposed new owner. This action is considered a material breach of the license agreement and an abandonment of the franchise.
In practical terms, a Crowne Plaza franchisee must obtain IHG's approval before transferring ownership of the hotel, the hotel site, or any equity interest in the business. The approval process involves IHG evaluating the proposed new owner based on factors such as fees, upgrading of the hotel, financial capacity, guaranty requirements, curing outstanding defaults, operational abilities, prior business dealings, and market feasibility. IHG has the right to assess any factors it deems relevant.
If a franchisee attempts to transfer ownership without submitting an application or if IHG denies the application but the transfer still occurs, Crowne Plaza can terminate the license agreement immediately. This highlights the importance of adhering to the franchisor's transfer requirements to avoid losing the franchise. The franchisee must also satisfy all accrued monetary obligations to IHG and its affiliates and execute a general release of claims against IHG and its affiliates.
This provision protects Crowne Plaza by ensuring that any new owner meets their standards and is capable of maintaining the brand's reputation and operational requirements. Prospective franchisees should carefully review the transfer provisions in the license agreement and understand the steps required to obtain approval for any future transfer of ownership.