What is the Crowne Plaza franchisee's responsibility regarding compliance with Applicable Law?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary set forth in the above License Agreement ("License"), the following provisions shall supersede and apply to each License for an Crowne Plaza, Crowne Plaza Suites, and Crowne Plaza Resort issued in the State of California:
-
- In accordance with the provisions under the U.S. Bankruptcy Code (11 U.S.C.A. Sec. 101 et seq.), paragraphs 11.C(1)(b) and (d) of the License shall be amended to include the following language: "Enforceability of this provision is a matter governed by the US Bankruptcy Code and enforceability or nonenforceability is subject to that law and rulings of a court of competent jurisdiction."
-
- California Business and Professions Code Sections 20000 through 20043 provide rights to the Licensee concerning termination or non-renewal of a License. If the License contains a provision that is inconsistent with the law, the law will control.
-
- The License contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable,
-
- The License and Guaranty require application of the laws of Georgia. In accordance with 5050.23 Sec. 310.114.1(c)(5)(B)(v), this provision may not be enforceable under California law.
-
- With respect to franchises sold in California, a franchisor is prohibited from modifying a franchise agreement, or requiring a general release, in exchange for any assistance related to a declared state or federal emergency.
-
- This Amendment may be executed in counterparts, which together shall constitute one and the same instrument. Signatures via Conga Sign, DocuSign, .PDF file, facsimile, or other electronic format have the same force and effect as originals.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, franchisees must adhere to federal, state, and local laws. Several amendments to the standard license agreement address specific state laws, ensuring that the franchise agreement does not violate those laws. These amendments primarily concern franchise rights, termination clauses, and dispute resolution processes. These amendments highlight the importance of franchisees understanding and complying with the specific regulations in their state.
For franchisees in California, the agreement acknowledges the rights provided to licensees concerning termination or non-renewal, as outlined in the California Business and Professions Code Sections 20000 through 20043. It also notes that certain liquidated damages clauses may be unenforceable under California Civil Code Section 1671. Similarly, for franchisees in North Dakota, the laws of North Dakota supersede any conflicting provisions in the license agreement or Georgia law. Liquidated damages and termination penalty provisions are also deleted to the extent they are prohibited by North Dakota law.
In Washington, the Washington Franchise Investment Protection Act may supersede the franchise agreement, particularly in areas of termination and renewal. The agreement also addresses non-competition covenants, stating that any provisions conflicting with the limitations set by RCW 49.62.020 and RCW 49.62.030 are void and unenforceable. Furthermore, RCW 49.62.060 prohibits Crowne Plaza from restricting a licensee from soliciting or hiring employees of another licensee or the franchisor.
For franchisees in Maryland, any statement, questionnaire, or acknowledgment signed by a franchisee cannot waive claims under state franchise law or disclaim reliance on statements made by the franchisor. In Rhode Island and Virginia, the franchise agreement is amended to ensure compliance with the Rhode Island Franchise and Distributorship Act and the Virginia Retail Franchising Act, respectively, particularly regarding jurisdiction, venue, and termination rights. These state-specific amendments demonstrate Crowne Plaza's effort to ensure franchisees' rights are protected under applicable laws.