What does the IHG System Fund Contribution for an Even Hotels franchise consist of?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 4 of Attachment "A". Licensee agrees and acknowledges that additional royalties may be charged on revenues from any activity if it is added at the Hotel by mutual agreement and it is not now offered at Brand System Hotels generally or it is designed or developed by or for IHG or its Affiliates. The Royalty Fee is solely in consideration of our granting Licensee the franchise conferred by this License and is not in exchange for any goods, services or assistance which may be furnished by IHG.
- (4) IHG System Fund Contribution. "IHG System Fund Contribution" means the assessments paid by Licensee, comprised of the Services Contribution and the Loyalty Program Contribution, for the IHG System Fund Activities (as defined in paragraph 4.G) to be provided by IHG and its Affiliates.
- a. Services Contribution. A monthly Services Contribution in the amount set forth in Item 5 of Attachment "A". The Services Contribution will typically be invested by IHG in activities that, in IHG's sole business judgment as to the long-term interests of the Brand System, strengthen the brand such as awareness advertising, marketing, sales, guest services, reservations, standards, training programs, research, and the development of new or improved services, associated products and platforms, but may also include tactical marketing initiatives more focused on short term revenue enhancement and seasonal marketing programs. The Service Contribution cannot be used to cover the cost of maintenance, repair, modernization, renovation, or upgrading of the Hotel. The Services Contribution does not include costs that Licensee incurs in the acquisition, installation or maintenance of reservations services, equipment or training, or in Licensee's own marketing activities. IHG and its Affiliates are not responsible for any of these costs.
The Services Contribution is subject to change by IHG from time to time. IHG may, on 30 days advance notice, at any time during the term of this License, and from time to time, increase the Services Contribution by up to 1% of Gross Rooms Revenue (as such term is defined on Attachment "A"). If IHG increases the
Services Contribution in this way, then IHG cannot make another discretionary increase again for 24 months after the start of a prior increase.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels's 2025 Franchise Disclosure Document, the IHG System Fund Contribution is comprised of two components: the Services Contribution and the Loyalty Program Contribution. These contributions are paid by the franchisee for IHG System Fund Activities, which are initiatives undertaken by IHG and its affiliates.
The Services Contribution is a monthly fee, the amount of which is detailed in Item 5 of Attachment A. IHG typically invests this contribution in activities that aim to strengthen the Even Hotels brand, such as advertising, marketing, sales, guest services, reservations, training programs, and research. These investments are made at IHG's discretion, based on their assessment of the long-term interests of the Brand System. However, the Services Contribution cannot be used for the maintenance, repair, or upgrading of the hotel itself, nor does it cover the costs incurred by the franchisee for acquiring, installing, or maintaining reservation services, equipment, training, or their own marketing activities.
The Loyalty Program Contribution includes an Initial Loyalty Marketing Contribution and a monthly Loyalty Program Contribution, also known as the "IHG One Rewards Fee." This fee is applied to qualifying room rates and other eligible hotel charges for each night a guest stays and earns IHG One Rewards points or airline miles. The prevailing rate for this contribution is specified in Item 5 of Attachment A. IHG retains the right to modify the amounts or terms and conditions of both the Initial Loyalty Marketing Contribution and the Loyalty Program Contribution at its discretion.
In essence, the IHG System Fund Contribution is a mandatory payment designed to support the broader IHG system and enhance the Even Hotels brand. While franchisees contribute to this fund, IHG has the sole discretion in how the funds are allocated and used, with no guarantee that individual franchisees will directly benefit from these activities in proportion to their contributions.