What does 'Equity Interest' mean in the context of a Crowne Plaza license agreement?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) The term "Equity Interest" means all forms of ownership, including, without limitation, membership, stock, partnership or any other form of equity interests in an Entity or property, both legal and beneficial, voting and non-voting, including stock interests, partnership interests, limited liability company interests, joint tenancy interests, leasehold interests, proprietorship interests, trust beneficiary interests, proxy interests, power-of-attorney interests, and all options, warrants, and any other forms of interest evidencing ownership or Control. References in this License to "publicly traded Equity Interests" shall mean any Equity Interests which are traded on any securities exchange or are quoted in any publication or electronic reporting service maintained by the National Association of Securities Dealers, Inc. or any of its successors.
- (2) The term "Person" means an individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any national, provincial, state, county, tribal or municipal government or any bureau, office, department or agency thereof and any fiduciary acting in an agency capacity on behalf of any of the foregoing.
- (3) The term "Control" (and any form thereof, such as "controlling" or "controlled") means, with respect to any Person, the possession, directly or indirectly, of the power or ability to direct or cause the direction of the management or policies of such Person.
- (4) If Licensee is an Entity, Licensee represents that the Equity Interests in Licensee are directly and (if applicable) indirectly owned, as shown in Attachment "A".
- (5) In computing changes of Equity Interests pursuant to this paragraph 9, limited partners will not be distinguished from general partners, and IHG's judgment will be final if there is any question as to the definition of Equity Interests or as to the computation of relative Equity Interests, including transfers of Equity Interests, the principal considerations being:
- (a) direct and indirect power to exercise control over the affairs of Licensee;
- (b) direct and indirect right to share in Licensee's profits; and
(c) amounts directly or indirectly exposed at risk in Licensee's business.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the term 'Equity Interest' is broadly defined within the license agreement. It encompasses all forms of ownership in an entity or property. This includes, but is not limited to, membership, stock, partnership interests, and any other form of equity, whether legal or beneficial, voting or non-voting.
This definition extends to various types of interests such as stock interests, partnership interests, limited liability company interests, joint tenancy interests, leasehold interests, proprietorship interests, trust beneficiary interests, proxy interests, and power-of-attorney interests. It also includes all options, warrants, and any other forms of interest that evidence ownership or control. The FDD specifies that 'publicly traded Equity Interests' refer to those traded on securities exchanges or quoted in electronic reporting services like those maintained by the National Association of Securities Dealers, Inc.
For a prospective Crowne Plaza franchisee, this comprehensive definition is important because it clarifies what constitutes ownership and control within the franchise agreement. When assessing changes in equity interests, the document states that limited partners will not be distinguished from general partners. IHG's judgment will be final in determining the definition of equity interests or the computation of relative equity interests, including transfers. The principal considerations include the power to control the franchisee's affairs, the right to share in profits, and the amounts exposed at risk in the franchisee's business. This broad interpretation of 'Equity Interest' ensures that all forms of ownership and control are considered when evaluating compliance with the franchise agreement.
This definition is crucial for franchisees as it dictates how changes in ownership or control of their business entity will be assessed by Crowne Plaza. Franchisees need to be aware that any transfer or change in these interests, even if seemingly minor, could trigger certain provisions within the license agreement, potentially requiring franchisor approval or leading to other implications. Understanding this definition is vital for maintaining compliance and avoiding unintended breaches of the franchise agreement.