Under what conditions are Crowne Plaza payments to franchisees considered provisional?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
IHG may, at its election at any time during the License Term, require Licensee to pay all outstanding fees by electronic funds transfer, direct account debit, ACH or other similar technology designed to accomplish the same purpose as may be designated by IHG. If IHG requires Licensee to make payments by any of the foregoing methods, Licensee agrees to make its payment in compliance with those
requirements and also to deposit and maintain at all times sufficient funds to cover all fees and payments that Licensee owes to IHG and its Affiliates in a segregated bank account that Licensee establishes and maintains for the Hotel.
Licensee will operate the Hotel so as to maximize Gross Rooms Revenue of the Hotel consistent with sound marketing and industry practice and will not engage in any conduct that reduces Gross Rooms Revenue of the Hotel in order to further other business activities. Charges may be made for optional products or services accepted by Licensee from IHG, either in accordance with current practice or as developed in the future.
Each payment under paragraph 3.B., except the Rooms Addition Fee or other fees not determined from Gross Rooms Revenue, shall be accompanied by the monthly statement referred to in paragraph 7.A. IHG may apply any amounts received under this License to any amounts due under this License. If any amounts under this License are not paid when due, such non-payment shall constitute a breach of this License and, in addition, such unpaid amounts will accrue interest beginning on the first day of the month following the due date at 1½% per month or the maximum interest permitted by applicable law, whichever is less.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
Based on the 2025 Crowne Plaza FDD, payments from franchisees are not explicitly described as 'provisional' under any specific conditions. However, the FDD does outline payment terms and conditions, including the possibility of IHG requiring electronic fund transfers or direct account debits for outstanding fees.
According to the FDD, IHG has the right to mandate that franchisees use electronic payment methods like electronic funds transfer, direct account debit, or ACH. If IHG exercises this option, the franchisee must comply with these requirements and maintain sufficient funds in a dedicated bank account to cover all fees owed to IHG and its affiliates. This ensures that Crowne Plaza can collect payments efficiently and reliably.
Furthermore, the FDD specifies that payments, excluding the Rooms Addition Fee or other fees not based on Gross Rooms Revenue, must be accompanied by a monthly statement. IHG can apply any received amounts to any outstanding debts under the license agreement. Non-payment of amounts due constitutes a breach of the license, and unpaid amounts accrue interest at a rate of 1½% per month or the maximum interest permitted by applicable law, whichever is lower. This highlights the importance of timely payments and the potential consequences of failing to meet financial obligations to Crowne Plaza.