In the Crowne Plaza franchise agreement, what does the term 'Company' refer to?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company accounts for the Agreement in accordance with Accounting Standards Codification (ASC) Topic 350-30, General Intangibles Other than Goodwill. In accordance with ASC 350-30-35-18, indefinite-lived intangible assets are reviewed annually for impairment. The Company has not recognized any impairment losses in respect of the Agreement for the years ended December 31, 2024, 2023, and 2022.
Revenue Recognition
Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer.
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.
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Revenue Recognition (continued)
Fee Business Revenue
The Company's business comprises the franchising of hotels and resorts primarily under the following brands: Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Hotel Indigo, EVEN Hotels, avid hotels, voco, Vignette Collection, Atwell Suites and Garner.
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.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the term "Company" has different meanings depending on the context. In the section regarding revenue recognition, "The Company" refers to the entity that franchises hotels and resorts, primarily under brands like Crowne Plaza, Holiday Inn, and others. Under franchise agreements, this "Company's" performance obligation is to provide a license to use its trademarks and intellectual property.
However, in the context of an agreement concerning beverages, "Company" refers to the provider of beverages to the hotels. Specifically, "Physical Case" means a physical case of Company Beverage and/or Bottler Bottle/Can Beverage as then-currently packaged and whose case count is deemed as standard by Company and Bottler.
Therefore, when reviewing the Crowne Plaza Franchise Disclosure Document, it is important to understand the context in which the term "Company" is used to accurately determine which entity it is referring to, as it could be Holiday Hospitality Franchising, LLC, or a beverage provider.