How does Crowne Plaza disaggregate revenue from contracts with customers?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company disaggregates revenue from contracts with customers by type of agreement, being franchise royalty fees and Orange Lake Country Club, Inc. (OLCC) fees, reflecting the differing nature, amount, timing and uncertainty of related revenue and cash flows. All fee revenue arises from the transfer of services to customers over time.
Under franchise agreements, the Company's performance obligation is to provide a license to use the Company's trademarks and other intellectual property. Franchise royalty fees are typically charged as a percentage of hotel gross rooms revenues and are treated as variable consideration, recognized as the underlying hotel revenues occur. Franchise royalty fees also include any liquidated damage settlements the Company receives from franchisees that terminate arrangements prior to expiration.
Application and re-licensing fees are not considered to be distinct from the franchise service and are recognized over the life of the related contract.
Under the Agreement, the Company is deemed to be acting as agent in the provision of these services and, as such, nets 95% of the license cost and contract asset amortization against revenue and reports a royalty fee equal to the 5% commission it earns through the Agreement.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the company disaggregates revenue from contracts with customers by the type of agreement. These agreement types include franchise royalty fees and Orange Lake Country Club, Inc. (OLCC) fees. This disaggregation reflects the differing nature, amount, timing, and uncertainty of related revenue and cash flows. All fee revenue for Crowne Plaza arises from the transfer of services to customers over time.
For franchise agreements, Crowne Plaza's performance obligation involves providing a license to use the company's trademarks and other intellectual property. Franchise royalty fees are typically charged as a percentage of hotel gross rooms revenues and are treated as variable consideration, recognized as the underlying hotel revenues occur. These fees also include any liquidated damage settlements the company receives from franchisees that terminate arrangements prior to expiration.
Application and re-licensing fees are not considered distinct from the franchise service and are recognized over the life of the related contract. Under an agreement, Crowne Plaza is deemed to be acting as an agent in the provision of these services and nets 95% of the license cost and contract asset amortization against revenue, reporting a royalty fee equal to the 5% commission it earns through the agreement.