For Crowne Plaza, how is the net investment in the lease presented on the consolidated balance sheets?

According to Crowne Plaza's 2025 Franchise Disclosure Document, when a sub-lease is classified as a sales-type lease, Crowne Plaza's interest in the lease is derecognized and replaced by a net investment in the lease receivable. This net investment is presented within 'net investment in subleases' on the consolidated balance sheets. Initially, it is recognized at the present value of lease payments receivable under the sublease. This value is then increased to reflect the accretion of interest and reduced for lease payments received.

This accounting treatment is significant for prospective franchisees as it clarifies how sublease arrangements are handled financially by Crowne Plaza. Understanding this can be crucial in evaluating the financial implications of any sublease agreements they might enter into as part of their franchise operations. It ensures transparency in how these transactions are recorded and reported in Crowne Plaza's financial statements.

For a franchisee, this means that if they sublease a property, the initial value of the sublease payments they expect to receive will be recorded as an asset. As they receive payments, this asset will be reduced, and the interest earned on the sublease will be added to the asset's value. This approach provides a clear picture of the financial impact of subleasing activities on Crowne Plaza's overall financial position.