Can the Services Contribution for an Even Hotels franchise be used for hotel renovations?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, the Services Contribution cannot be used for hotel renovations. The Services Contribution is a monthly fee that Even Hotels franchisees pay, which IHG (InterContinental Hotels Group) typically invests in activities that strengthen the brand. These activities include awareness advertising, marketing, sales, guest services, reservations, standards, training programs, and research. IHG also uses the Services Contribution for the development of new or improved services, associated products, and platforms, and may include tactical marketing initiatives focused on short-term revenue enhancement and seasonal marketing programs.
The FDD explicitly states that the Services Contribution cannot be used to cover the costs of maintenance, repair, modernization, renovation, or upgrading of the hotel. Additionally, the Services Contribution does not cover the costs that the franchisee incurs in the acquisition, installation, or maintenance of reservation services, equipment, or training, or in the franchisee's own marketing activities. IHG and its affiliates are not responsible for these costs.
This means that Even Hotels franchisees must fund all ordinary and extraordinary maintenance and repair, capital improvements, and renovations of the hotel themselves. Franchisees need to plan and budget separately for these expenses, as the Services Contribution is specifically allocated for brand-related activities managed by IHG. This is a common practice in franchising, where franchisees are typically responsible for maintaining and upgrading their individual locations to meet brand standards, while franchisors focus on system-wide marketing and support initiatives.