Under what circumstances may IHG require replacement guarantees for a Crowne Plaza license?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
IHG shall require certain individuals or other entities (the "Guarantors") to guarantee all of Licensee's duties, requirements and obligations under this License, both financial and nonfinancial, by executing a guarantee substantially in the form attached hereto (the "Guaranty"). In the event of the death or bankruptcy of any Guarantor, IHG may require replacement guarantees sufficient in IHG's reasonable discretion to provide IHG with the same protection as IHG had originally bargained for. If Licensee is in breach or default under this License, IHG may proceed directly against each such individual and/or business entity Guarantor without first proceeding against Licensee and without proceeding against or naming in the action or proceeding any other such Guarantor. Licensee's obligations and those of each such Guarantor will be joint and several. Notice to or demand upon one such Guarantor will be considered notice to or demand upon Licensee and all such Guarantors. No notice or demand need be made to or upon all such Guarantors. The cessation of or release from liability of Licensee or any such Guarantor will not relieve Licensee or any other Guarantor, as applicable, from liability under this License, except to the extent that the breach or default has been remedied or money owed has been paid.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, IHG requires certain individuals or entities, known as Guarantors, to guarantee the franchisee's obligations under the license agreement. These obligations encompass both financial and nonfinancial duties. IHG uses a guarantee form to formalize this arrangement.
IHG retains the right to demand replacement guarantees if a Guarantor dies or declares bankruptcy. The replacement guarantees must be sufficient, in IHG's reasonable judgment, to provide the same level of protection that IHG initially sought when the franchise agreement was established.
If the Crowne Plaza franchisee breaches the license agreement, IHG can directly pursue the Guarantors without first taking action against the franchisee. The obligations of the franchisee and the Guarantors are considered joint and several, meaning each party is independently liable for the full amount. Notice to one Guarantor is considered notice to all, and IHG is not required to notify all Guarantors. The cessation of liability for either the franchisee or a Guarantor does not relieve the other party from their obligations unless the breach is resolved or the money owed is paid.