Who is responsible for payment of 'Chargebacks' to Crowne Plaza?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
You are responsible for all Chargebacks and adjustments associated with the transactions that you submit for processing.
You are responsible for all Chargebacks, Third Party Based Fees, Servicers Fees, and other amounts arising from fraudulent activity processed through your Merchant Systems and/or your Merchant Account (regardless of any AVS response that you receive).
- 4.8 Costs. If you or a Merchant Provider (or other Third Party used by you) are determined by any Card Organization, regardless of any forensic analysis or report, to be the likely source of any loss, disclosure, theft or compromise of Cardholder data or Card transaction information or are determined to have caused Cardholder data to be put at risk (together, "Compromised Data Events") and regardless of your belief that you have complied with the Card Organization Rules or any other security precautions and are not responsible for the Compromised Data Event, you must promptly pay us for all related expenses, claims, assessments, fines, losses, costs, penalties, and Issuer reimbursements imposed by the Card Organizations against us (together, "Data Compromise Losses").
In addition to the foregoing, you must also pay us promptly for all expenses and claims made by Issuers against us alleging your responsibility for the Compromised Data Event, apart from any claim procedures administered by the Card Organizations.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the franchisee, referred to as "you" in the document, is responsible for all chargebacks and adjustments associated with transactions they submit for processing. This means that if a customer successfully disputes a charge for goods or services at a Crowne Plaza location, the franchisee is liable for the amount of the chargeback. This responsibility extends to chargebacks arising from fraudulent activity processed through the franchisee's merchant systems, regardless of any Address Verification System (AVS) response received.
This allocation of responsibility is standard practice in franchising, as the franchisee directly interacts with customers and controls the quality of goods and services provided. The FDD also states that servicers may debit the franchisee's bank account for the amount of chargebacks from settlement funds, settlement accounts, or any reserve account. This highlights the importance of maintaining sufficient funds to cover potential chargebacks and carefully managing transactions to minimize disputes.
Furthermore, if a Crowne Plaza franchisee or their merchant provider is determined to be the source of a data compromise event, such as a loss or theft of cardholder data, the franchisee is responsible for all related expenses, claims, assessments, fines, losses, costs, penalties, and issuer reimbursements imposed by card organizations. This underscores the critical need for franchisees to implement robust security measures to protect cardholder data and comply with all applicable rules and regulations. The franchisee is also responsible for expenses and claims made by issuers alleging responsibility for a data compromise event, even apart from claim procedures administered by card organizations.
In summary, the Crowne Plaza franchisee bears the financial risk associated with chargebacks and data compromise events, making it essential to implement best practices in transaction processing, customer service, and data security to mitigate these risks and protect their financial interests.