Under what circumstances will the Reserve Account for a Crowne Plaza franchise be fully funded immediately?

According to the 2025 Crowne Plaza Franchise Disclosure Document, the Reserve Account must be fully funded immediately under specific circumstances. These circumstances include instances of fraud, suspected fraud, the occurrence of an Event of Default, or if any party provides notice of termination of the License Agreement.

This immediate funding requirement serves as a protective measure for Crowne Plaza, ensuring that funds are readily available to cover potential losses or liabilities arising from the franchisee's actions or financial instability. For a prospective franchisee, this means that any involvement in fraudulent activities, facing an Event of Default (which typically involves breaches of the franchise agreement), or initiating termination of the agreement will trigger an immediate demand to fully fund the Reserve Account.

The Reserve Account can be funded through various methods, including debits to the franchisee's Settlement Account or other accounts, collection of payments otherwise due to the franchisee, or the franchisee providing a letter of credit acceptable to Crowne Plaza. Crowne Plaza will hold these funds and return any remaining amounts after a period of either ten months after termination of the agreement or a longer period consistent with their liability for card transactions and chargebacks. Franchisees should be aware that they are typically not entitled to interest on any funds held in the Reserve Account unless specifically required by law.