What obligations does a Crowne Plaza franchisee have upon termination or non-renewal of the license?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
| i. | Your obligations upon termination/ non-renewal | License: 7.A. 11.D, 11.E, 13.J and Attachment "B" MTSS,13.1 & Attachment 4-1 to Schedule 4 | Obligations include de-identification and payment of amounts due.|
Note 2: Termination of License by Holiday for Breach of Obligations Before Holiday Authorizes You to Use the Brand System at your Hotel: If Holiday terminates your License due to your breach of any of your obligations under the License before Holiday authorizes you to use the Brand System at the Hotel (for example, your failure to perform the construction, upgrading and renovation work described on Attachment "B" of the License), then you must pay Holiday a lump sum equal to the monthly average of all amounts that would have been payable to Holiday under paragraphs 3.B(3) through 3.B(6) of the License assuming the Hotel had collected Gross Rooms Revenue based on the average daily revenue per available room for all "mature hotels" in the Brand System in the United States for the previous twelve months, as determined by Holiday, multiplied by the greater of (a) six or (b) the number of full and partial months from the Effective Date to the termination date of the License. For purposes of this paragraph, "mature hotels" means hotels which were open for two full years or longer; were licensed or, alternatively, owned and/or managed by Holiday or one of its affiliates; and, were not in default of their applicable license or management agreement obligations as of the applicable date.
Note 3: Termination of License by Holiday for Breach of Obligations After Holiday Authorizes You to Use the Brand System at your Hotel: If, after you are authorized to use the Brand System in the Hotel, Holiday terminates the License under paragraphs 11.B or 11.C (see table, sections g and h), you must promptly pay Holiday (as liquidated damages for the premature termination only, and not as a penalty nor as damages for breaching the License or in lieu of any other payment) a lump sum equal to the total amounts required under paragraph 3.B(3) through (6) of the License during the 60 calendar months of operation preceding the termination; or during the preceding number of months equal to the unexpired License term at the time of termination (if less than 60 months); or if the Hotel has not been in operation in the Brand System for 60 months, an amount equal to the greater of: (1) 60 times the monthly average of these amounts for the period during which the Hotel has been in operation in the Brand System, or (2) 60 times these amounts as are due for the one month preceding the termination.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 87–91)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, Item 17 outlines the franchisee's obligations upon termination or non-renewal of the license. Specifically, the franchisee must de-identify the premises, removing all branding and indications that it is a Crowne Plaza location. Additionally, the franchisee is obligated to pay all outstanding amounts due to Crowne Plaza. These obligations are detailed in the License Agreement sections 7.A, 11.D, 11.E, 13.J, and Attachment "B", as well as the MTSS, sections 13.1 & Attachment 4-1 to Schedule 4.
Furthermore, if Crowne Plaza terminates the license before the franchisee is authorized to use the Brand System at their hotel due to a breach of obligations (such as failure to complete construction or renovations as described in Attachment "B" of the License), the franchisee must pay a lump sum. This sum is calculated as the monthly average of amounts payable under paragraphs 3.B(3) through 3.B(6) of the License, assuming the hotel had collected Gross Rooms Revenue based on the average daily revenue per available room for all "mature hotels" in the Brand System in the United States for the previous twelve months. "Mature hotels" are defined as those open for two full years or longer, licensed or managed by Holiday or its affiliates, and not in default of their license or management agreement obligations. The lump sum is then multiplied by the greater of six or the number of full and partial months from the Effective Date to the termination date of the License.
If, after authorization to use the Brand System, Crowne Plaza terminates the license under paragraphs 11.B or 11.C, the franchisee must promptly pay liquidated damages. This lump sum is equal to the total amounts required under paragraph 3.B(3) through (6) of the License during the 60 calendar months of operation preceding the termination. If the hotel has been in operation for less than 60 months, the amount is the greater of (1) 60 times the monthly average of these amounts or (2) 60 times the amounts due for the one month preceding the termination. These financial obligations can be significant, especially if the termination occurs early in the franchise term or if the hotel was performing well.