How much notice will IHG provide before auditing a Crowne Plaza hotel's premises?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
of the Hotel. Licensee will maintain an accounting system which fully and accurately reflects all financial aspects of the Hotel and its business. Such records shall include but not be limited to books of account, tax returns, governmental reports, register tapes, daily reports, and complete quarterly and annual financial statements (profit and loss statements, balance sheets and cash flow statements). The requirement to preserve records as set forth herein shall continue beyond the expiration or sooner termination of the License Term.
C. Audit.
IHG may require Licensee to have the Hotel's Gross Rooms Revenue and/or monies due hereunder computed and certified as accurate. During the License Term and for two years afterward, IHG and its authorized agents will have the right to verify information required under this License by requesting, receiving, inspecting and auditing, at all reasonable times, any and all records referred to above wherever they may be located (or elsewhere if reasonably requested by IHG). If any such inspection or audit discloses a deficiency in any payments due hereunder, and the deficiency in any payment is not offset by overpayment, Licensee shall immediately pay to IHG the deficiency and interest thereon as provided in paragraph 3.C. along with an audit f
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, IHG has the right to audit a licensee's records at all reasonable times during the license term and for two years afterward. The purpose of the audit is to verify information required under the license agreement. This includes requesting, receiving, inspecting, and auditing records wherever they may be located, or elsewhere if reasonably requested by IHG. The FDD does not specify a particular timeframe for advance notice before an audit.
If an audit reveals a deficiency in payments and it's not offset by any overpayment, the franchisee must immediately pay the deficiency along with interest and an audit fee of $3,000, which IHG may increase. However, if the audit does not find a deficiency, no audit fee will be assessed. Conversely, if the audit reveals an overpayment, IHG will credit this amount against future payments or promptly refund it to the franchisee without interest.
Given the lack of a specific notice period, prospective Crowne Plaza franchisees should be prepared for audits to occur with little advance warning. It would be prudent for potential franchisees to inquire with IHG about their typical audit practices, including how much notice is usually provided, to better understand the practical implications of this audit clause.