How can IHG change the Services Contribution for a Crowne Plaza franchise?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Services Contribution is subject to change by IHG from time to time if either approved by: (i) a majority of members (which shall be counted on the basis of one hotel, one vote) of the Brand System who represent a majority of the hotels to be
subject to the increase; or (ii) a majority of the members of the Brand System or the "IHG Owners Association" (the franchisee association or successor sanctioned as such by IHG) at a meeting of Brand System licensees or at an annual IHG Owners Association meeting either as may be convened by IHG upon no less than 45 days' advance notice. IHG may, in its sole judgment, upon 30 days' prior notice, increase this Services Contribution by an amount not to exceed 1% of Gross Rooms Revenue (as such term is defined on Attachment "A") and such increase shall be effective for a period no longer than 12 months; provided that, in the event of such increase, IHG shall not make such a discretionary increase again for a period of 24 months after the expiration of any such increase.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, IHG can change the Services Contribution under certain conditions. IHG may adjust the Services Contribution if the change is approved by either a majority of Brand System members, with each hotel having one vote and representing a majority of the hotels subject to the increase, or by a majority of members of the Brand System or the IHG Owners Association at a meeting convened with at least 45 days' advance notice.
Additionally, IHG has the discretion to increase the Services Contribution by up to 1% of Gross Rooms Revenue, provided they give 30 days' prior notice. This increase can only be effective for a maximum of 12 months, and IHG cannot implement another discretionary increase for at least 24 months after the expiration of the initial increase.
For a prospective Crowne Plaza franchisee, this means that the Services Contribution is not a fixed amount and can fluctuate based on decisions made by IHG and/or the Brand System members. While IHG must adhere to specific procedures and limitations when increasing the contribution, franchisees should be aware that these costs can change over time, potentially impacting their operating expenses and profitability. Franchisees should stay informed about any proposed changes and participate in relevant meetings or associations to voice their concerns or support proposed adjustments.