How does Springhill Suites By Marriott charge the monthly fee for services, and is it pro-rated?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
ees on a monthly basis over the term of the agreement as those amounts become payable. Initial application and relicensing fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise agreements.
Under our franchise agreements, franchisees participate in certain centralized programs and services, such as marketing, sales, reservations, and insurance programs, which Marriott operates for their benefit. These programs and services do not generate a profit over the long term, and accordingly, when we recover the costs incurred for these programs and services from our franchisees, we do not seek a mark-up. The amounts we charge for these programs and services are generally a combination of fixed fees and variable fees based on sales or other metrics and are payable on a monthly basis. We recognize revenue within the "Cost reimbursement revenue" caption of our Income Statements when the amounts may be billed to franchisees, and we recognize expenses within the "Reimbursed expenses" caption as they are incurred, which is simultaneous.
Notes to Financial Statements (continued) ($ in Thousands)
2. Summary of Significant Accounting Policies (continued)
Contract Balances
We generally receive payments from customers as we satisfy our performance obligations.
Source: Item 17 — , "Renewal, Termination, Transfer, and Dispute Resolution," is amended by the addition of the following paragraph(s) at the conclusion of the Item: (FDD pages 285–553)
What This Means (2025 FDD)
According to the 2025 Springhill Suites By Marriott Franchise Disclosure Document, franchisees participate in centralized programs and services such as marketing, sales, reservations, and insurance. The amounts charged for these programs are a combination of fixed and variable fees based on sales or other metrics, payable monthly. Springhill Suites By Marriott recognizes revenue when these amounts may be billed to franchisees.
The fees that Springhill Suites By Marriott charges will be trued up to actual cost prior to year-end. This means that while franchisees are charged throughout the year based on estimated costs, there is an adjustment made at the end of the year to reflect the actual costs incurred.
While the FDD specifies that fees are payable on a monthly basis, it does not explicitly state whether these fees are pro-rated if a hotel opens or closes mid-month. To clarify whether the monthly fees are pro-rated, prospective franchisees should seek clarification from Springhill Suites By Marriott during their due diligence process.