Under what circumstances will the Crowne Plaza Reserve Account be fully funded immediately?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Timing. The Reserve Account shall be fully funded: (i) immediately in instances of fraud, suspected fraud, the occurrence of an Event of Default, or any party providing notice of termination of the Agreement; or (ii) upon three days' notice if required for any other reason.
(b) Method. The Reserve Account may be funded by all or any combination of the following: (i) one or more debits to your Settlement Account or any other accounts held by either of us or any of our respective Affiliates, at any financial institution maintained in the name of Client, any of its principals, or any of its guarantors, or if any of same are authorized signers on such account; (ii) our collection of any payments or amounts (including settlement funds) otherwise due to you; or (iii) with our consent, your delivery to us of a letter of credit issued by a financial institution acceptable to us and in a form satisfactory to us.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, the Reserve Account that Crowne Plaza may require will 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 aforementioned situations. For a prospective franchisee, this means that in the event of fraud or an Event of Default, they should be prepared to immediately deposit the full amount required into the Reserve Account.
The FDD also specifies how the Reserve Account may be funded. Crowne Plaza can debit the franchisee's Settlement Account or other accounts, collect payments otherwise due to the franchisee, or, with Crowne Plaza's consent, accept a letter of credit from a financial institution. Understanding these funding methods is crucial for franchisees to manage their finances and ensure compliance with the franchise agreement.