What is the ending balance in 'payables to affiliates' in the consolidated balance sheets for Crowne Plaza, and how are these amounts subsequently recorded?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
liation of gross to net revenue is as follows:
| 2024 | 2023 2022 | 2024 2023 2022 | |
|---|---|---|---|
| Service cost | $ | - $ - $ | - $ - $ - $ - |
| Interest cost | 1,517 | 1,656 1,058 | 593 628 405 |
| Amortization of unrecognized | |||
| actuarial loss (gain) | - - | 478 (597) (639) (280) | |
| Net periodic benefit cost (gain) | $ 1,517 | $ 1,656 $ 1,536 | $ (4) $ (11) $ 125 |
4. Related-Party Transactions
Six Continents Hotels, Inc. maintains certain marketing, reservation, and loyalty programs for the benefit of the Systems. Pursuant to the Agreement, all Company assessments to franchisees relating to these programs are remitted to Six Continents Hotels, Inc. Such amounts are not reflected in franchise royalty fees (see Note 3). All amounts due to or from affiliates, other than a line of credit from an affiliate (see Note 5), are non-interest-bearing and have no stated maturity date.
Net payables to affiliates included in the balance sheets are $202.6 million and $148.7 million at December 31, 2024 and 2023, respectively. These current amounts are of a working capital nature. Receivables from affiliates are considered to be fully recoverable on the basis of the Group's creditworthiness (see Note 5).
An affiliated company has made commitments to pay key money on behalf of the Company.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the net payables to affiliates included in the balance sheets were $202.6 million as of December 31, 2024, and $148.7 million as of December 31, 2023. These amounts are considered current and are of a working capital nature. These working capital amounts are generally non-interest-bearing.
Other long-term receivables from and payables to affiliated companies, which are generally interest-bearing, are netted and included as an offset in Parent's Investment in the consolidated balance sheets. Interest is paid on the balances with affiliates as due under the note agreements. Interest income related to receivables from affiliates and interest expense related to payables to affiliates are presented on a net basis in the consolidated statements of net income.
For a prospective Crowne Plaza franchisee, this indicates that Crowne Plaza engages in significant financial transactions with its affiliates. Understanding the nature and terms of these related-party transactions, particularly regarding payables, is crucial. Franchisees should be aware that while short-term payables are considered working capital and are non-interest bearing, other long-term payables may be interest-bearing and could impact the overall financial performance of the franchise system.