Under the Crowne Plaza license, is IHG permitted to use its Affiliates to fulfill its obligations?
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)
According to the 2025 Crowne Plaza Franchise Disclosure Document, IHG can utilize its affiliates to fulfill obligations related to the franchise agreement. The FDD states that an "Affiliate" means any division, subsidiary, parent, or other entity that directly or indirectly controls, is controlled by, or is under common control with such entity.
This means that IHG can delegate certain responsibilities or tasks outlined in the franchise agreement to its affiliated companies. For a prospective franchisee, this could mean interacting with different entities within the IHG network for various aspects of the business, such as supply chain management, marketing, or training.
Furthermore, the FDD emphasizes that the franchisee must promptly pay all amounts due to IHG and its affiliates for royalties, charges, goods, or services purchased for use at the hotel. This highlights the financial relationship between the franchisee and IHG's affiliates. The franchisee acknowledges IHG's and its Affiliates' ownership of the Brand System and that IHG or its Affiliates has the sole and exclusive right to grant licenses to use all or any element(s) or component(s) of the Brand System.