Under what circumstances can IHG require replacement guarantees for an Even Hotels license?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
If there is a change in control of the management company or if the management company becomes a competitor of IHG (or an Affiliate of a competitor) or a Prohibited Person (or an Affiliate of a Prohibited Person), or if the management company becomes the principal operator for a competitor or if there is a material adverse change to the financial condition or operational capacity of the management company, Licensee will promptly notify IHG of any such event together with such additional information that IHG may reasonably request. Based on these changed circumstances, IHG may require Licensee to terminate its agreement with such management company and retain a replacement management company that will be subject to IHG's consent. After IHG receives such notice and any such additional information IHG reasonably requests, IHG will respond to Licensee within thirty (30) days. Furthermore, if Licensee's management company becomes unsuitable or unqualified to operate the Hotel as determined by IHG, in our sole discretion, or if the Hotel is not operated in compliance with IHG's guest satisfaction program, Licensee may be required to retain a new Management Company that is acceptable to us within ninety (90) days.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to the 2025 Even Hotels Franchise Disclosure Document, IHG (InterContinental Hotels Group) has specific rights regarding the management company operating an Even Hotels location. The hotel must always be operated by a management company acceptable to IHG, and IHG has the right to approve any proposed management company and its contract. The management must be continuous throughout the license term.
IHG can require an Even Hotels licensee to terminate its agreement with a management company and retain a replacement under certain conditions. These include if there is a change in control of the management company, if the management company becomes a competitor or an affiliate of a competitor of IHG, or if the management company becomes the principal operator for a competitor. IHG can also require a replacement if there is a material adverse change to the financial condition or operational capacity of the management company, or if the management company becomes unsuitable or unqualified to operate the hotel as determined by IHG.
Additionally, if an Even Hotel is not operated in compliance with IHG's guest satisfaction program, the licensee may be required to retain a new management company acceptable to IHG within 90 days. In any of these situations, the Even Hotels franchisee is responsible for promptly notifying IHG of the relevant events and providing any additional information IHG reasonably requests. IHG will then respond within 30 days regarding the need for a replacement management company.
This provision ensures that Even Hotels maintains consistent operational standards and protects its brand integrity by allowing IHG to intervene if the management company's performance or suitability is compromised. For a prospective franchisee, this highlights the importance of selecting a management company that aligns with IHG's standards and maintaining compliance with IHG's operational requirements to avoid potential disruptions and additional costs associated with replacing a management company.