Under what condition will a Crowne Plaza franchisee have to pay an excessive chargeback fee?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.5 Excessive Chargebacks. If your Chargeback percentage for any line of business exceeds the estimated industry Chargeback percentage, you shall, in addition to the Chargeback fees and any applicable Chargeback handling fees or fines, pay us an excessive Chargeback fee for all Chargebacks occurring in such month in such line(s) of business.
Each estimated industry Chargeback percentage is subject to change from time to time by us in order to reflect changes in the industry Chargeback percentages reported by Visa, Mastercard or Discover.
Your Chargeback percentage will be calculated as the larger of (a) the total Visa, Mastercard and Discover Chargeback items in any line of business in any calendar month divided by the number of Visa, Mastercard and Discover transactions in that line of business submitted that month, or (b) the total dollar amount of Visa, Mastercard and Discover Chargebacks in any line of business received in any calendar month divided by the total dollar amount of your Visa, Mastercard and Discover transactions in that line of business submitted in that month.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, a franchisee will be charged an excessive chargeback fee if their chargeback percentage for any line of business exceeds the estimated industry chargeback percentage. This fee is in addition to the standard chargeback fees, handling fees, or fines. The excessive chargeback fee applies to all chargebacks occurring in that month for the specific line of business that exceeded the industry threshold.
The industry chargeback percentages are subject to change by Crowne Plaza to reflect changes reported by Visa, Mastercard, or Discover. The franchisee's chargeback percentage is calculated as the larger of two figures: (a) the total number of Visa, Mastercard, and Discover chargeback items divided by the total number of transactions, or (b) the total dollar amount of Visa, Mastercard, and Discover chargebacks divided by the total dollar amount of transactions. Both calculations are specific to each line of business and are assessed monthly.
This policy means that Crowne Plaza franchisees need to actively manage and monitor their chargeback rates to avoid incurring additional fees. Franchisees should compare their chargeback percentages against industry benchmarks and implement strategies to reduce chargebacks, such as improving customer service, ensuring accurate order fulfillment, and addressing customer complaints promptly. Failure to do so could result in significant and unpredictable expenses, impacting the profitability of the franchise.