Is adherence to capital reinvestment and renovation cycles required for Even Hotels franchisees?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
reof and any fiduciary acting in an agency capacity on behalf of any of the foregoing. "Prohibited Person" means any person identified by Her Majesty's Treasury of the United Kingdom ("UK"), by the Office of Foreign Assets Control of the Department of the Treasury of the United States ("US") as a "specially designated national" or otherwise subject to sanction by the European Union ("EU") and/or the United Nations ("UN"), (collectively, "Sanctioning Bodies"), or any other Person with whom IHG, or any of its Affiliates, is otherwise prohibited from transacting business.
O. Capital Reserve; Capital Reinvestment and Renovation Cycles.
- (1) IHG may require Licensee to establish a capital reserve ("Capital Reserve") in an amount not in excess of 5% of Gross Revenue annually to be used for capital expenditures and the upgrading of the Hotel, including the renovation of public areas, guest rooms, guest room corridors, and the replacement of FF&E. IHG shall give Licensee no less than ninety (90) days' notice of imposing such requirement to establish a Capital Reserve, as the same may be established or changed by IHG from time to time. In such event, Licensee must establish a Capital Reserve account funded monthly in a bank selected by Licensee. Licensee shall make expenditures from such account for the purposes hereinbefore specified in accordance with IHG's requirements. Licensee acknowledges that the Capital Reserve may not be sufficient to maintain the Hotel as a first-class facility in accordance with the Standards, and Licensee shall promptly provide any necessary additional funds to meet IHG's product quality and consumer quality requirements; as well as Licensee's renovation obligations specified herein.
- (2) Throughout the License Term, regardless of whether IHG has required Licensee to establish a Capital Reserve, Licensee must complete significant renovations of the Hotel, including, but not limited to, the public areas, guest rooms, and guest room corridors in order to maintain the Hotel as a first-class facility. These mandatory renovations include: (a) replacing Soft Goods at least every seven (7) years after such Soft Goods were installed and (b) replacing Case Goods at least every fourteen (14) years after such Case Goods were installed; and, if necessary replacing such Soft Goods and Case Goods more frequently in order to (i) maintain compliance with the Standards or IHG's quality and guest
satisfaction programs; (ii) remove risk of injury to persons or property; or (iii) ensure compliance with all applicable laws.
- (3) Licensee must fund all ordinary and extraordinary maintenance and repair, capital improvements and renovations of the Hotel.
- (4) For purposes of this paragraph 13.O.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, franchisees must adhere to capital reinvestment and renovation cycles. IHG (InterContinental Hotels Group) may require franchisees to establish a capital reserve, potentially up to 5% of gross revenue annually, for capital expenditures and hotel upgrades, including renovations of public areas, guest rooms, and FF&E (furniture, fixtures, and equipment). IHG will provide at least 90 days' notice before imposing or changing this requirement. Franchisees must fund this reserve monthly in a bank account they select and use the funds according to IHG's requirements. The franchisee is responsible for funding all ordinary and extraordinary maintenance, repairs, capital improvements, and renovations of the hotel. Licensee must fund all ordinary and extraordinary maintenance and repair, capital improvements and renovations of the Hotel.
Even if IHG doesn't mandate a capital reserve, Even Hotels franchisees must still complete significant renovations to maintain the hotel's first-class status. These renovations include replacing soft goods (textiles, fabrics, etc.) at least every seven years and case goods (furniture and fixtures) at least every fourteen years after installation. More frequent replacements may be necessary to comply with standards, quality programs, prevent injury risks, or meet legal requirements. The franchisee is responsible for funding all ordinary and extraordinary maintenance, repairs, capital improvements, and renovations of the hotel.
Before starting any renovations, Even Hotels franchisees must submit their renovation plans to IHG for review and approval to ensure compliance with brand standards. IHG also retains the right to require franchisees to make renovations to conform the hotel's FF&E to current brand standards and design criteria. Franchisees must inform IHG of the installation dates for soft goods and case goods, which IHG can verify. This ensures that Even Hotels maintains consistent quality and appearance across all locations, which is a common practice in the franchise industry to protect brand reputation and customer experience.