What are 'unbundling costs' as defined in the Crowne Plaza dispensing equipment lease?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Lease is terminated with respect to any piece of Equipment for any reason, other than Company removing a piece of Equipment without cause under this section, prior to 100 months from the Commencement Date for that piece of Equipment, Equipment Lessee will pay Company the actual cost of removal (including standard shipping and handling charges) and remanufacturing of that Equipment, as well as the unamortized portion of the costs of (i) installation, (ii) non-serialized parts (e.g., pumps, racks and regulators) and other ancillary equipment.
Collectively, removal costs and items (i) and (ii) are referred to as "unbundling costs." The terms of this Lease will continue in effect with respect to each piece of Equipment until the Equipment has been removed from Equipment Lessee's premises and will survive the expiration or termination of any agreement into which this Lease is incorporated.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, "unbundling costs" refer to specific expenses a franchisee may incur if the dispensing equipment lease is terminated before 100 months from the commencement date. These costs include the actual expenses for removing the equipment, such as standard shipping and handling charges, as well as the cost of remanufacturing the equipment.
In addition to removal and remanufacturing costs, "unbundling costs" also encompass the unamortized portion of the initial installation expenses and the costs associated with non-serialized parts and other ancillary equipment like pumps, racks, and regulators. The franchisee is responsible for covering these unamortized costs if the lease is terminated early for any reason other than the company removing the equipment without cause.
This provision in the Crowne Plaza franchise agreement ensures that the company is compensated for the initial investment in equipment and installation if the franchisee terminates the lease prematurely. It is important for prospective franchisees to understand these potential costs and factor them into their financial planning, as early termination of the lease could result in significant expenses beyond the standard lease payments.