Does Crowne Plaza typically require collateral when extending credit to customers?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
If Customer elects to lease additional equipment, such equipment will be leased to Customer at an annual lease rate calculated by multiplying the total installed cost of the additional equipment by the then-current lease factor. The lease factor currently in effect for equipment is 0.24. Should the lease factor change during the Term, any equipment installed after the change goes into effect will be subject to the new lease factor. For the avoidance of doubt, if the ownership and/or management of a Hotel changes, the then-current lease factor will remain in effect for that Hotel. Lease charges, if any, will be invoiced. Any unpaid invoices by a Hotel will be handled in accordance with the Unpaid Invoice Procedure defined in Exhibit A-1, Section 5. All equipment provided by Company will at all times remain the property of Company and are subject to the terms and conditions of the Lease except as specifically changed by any of the Program Terms and Conditions or Standard Terms and Conditions of this Agreement.
At a minimum, equipment provided pursuant to this Exhibit A-2 shall include at no cost to Customer in a quantity reasonably necessary for each Hotel:
Orange Juice Carafes
- ¾ Company will provide 2 cases (24 carafes) of Simply juice carafes to each Hotel in the Holiday Inn and Crowne Plaza brands in Year 1
- ¾ Company will provide a maximum of 1 additional case (12 carafes) for each Hotel in the Holiday Inn and Crowne Plaza brands in Year 2 through the remainder of the Term
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
Based on the 2025 Crowne Plaza Franchise Disclosure Document, there is no mention of Crowne Plaza requiring franchisees to provide collateral when extending credit to customers. The FDD does outline payment terms and conditions related to fees and invoices between the franchisee and franchisor. Specifically, IHG (InterContinental Hotels Group), the franchisor, can require franchisees to pay outstanding fees via electronic funds transfer, direct account debit, ACH, or similar methods. IHG may also require franchisees to maintain sufficient funds in a segregated bank account to cover fees owed to IHG and its affiliates.
Additionally, the FDD details the handling of unpaid invoices related to equipment leases and service programs. For example, if a franchisee elects to lease additional equipment such as dispensers, the lease rate is calculated by multiplying the total installed cost by a lease factor (currently 0.24). Unpaid invoices for these leases are subject to the company's payment/credit terms, and the franchisor may refuse to deliver further beverages until the invoice is paid. These stipulations primarily concern the financial obligations between the franchisee and franchisor, rather than the franchisee's credit arrangements with their own customers.
While the FDD excerpts discuss various financial aspects of the franchise agreement, they do not provide information on whether Crowne Plaza franchisees typically need to provide collateral when extending credit to their customers. A prospective franchisee should seek clarification from the franchisor regarding typical credit practices and requirements related to customer transactions.