Caption_By_Hyatt 2025 Franchise FAQ - FDD Ninja

Question 1

As of December 31, 2023, what was the total value of 'Other assets' reported for Caption By Hyatt, considering both Level One and Level Two assets?

Accepted Answer

as therefore impaired. The operating results and financial position of this hotel prior to the sale remain within our owned and leased segment. At December 31, 2023, we classified the assets and liabilities as held for sale on our consolidated balance sheet.

*Destination Residential Management*—During the year ended December 31, 2023, we sold our interests in the entities that own the Destination Residential Management business to an unrelated third party for \$2 million of base consideration, subject to customary adjustments related to working capital and indebtedness, and up to an additional \$48 million of contingent consideration. The contingent consideration can be earned within two years following the sale up

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 2

How many Caption By Hyatt outlets were reacquired from franchisees between 2022 and 2024?

Accepted Answer

| Col. 1    | Col. 2 | Col. 3                             | Col. 4            | Col. 5                                      | Col. 6            | Col. 7                        | Col. 8                           |
|-----------|--------|------------------------------------|-------------------|---------------------------------------------|-------------------|-------------------------------|----------------------------------|
| State     | Year   | Outlets at Start of the Year | Outlets Opened | Outlets Reacquired From Franchisee | Outlets Closed | Outlets Sold to Franchisee | Outlets at End of the Year |
| Tennessee | 2022   | 0                                  | 1                 | 0                                           | 0                 | 0                             | 0                                |
|           | 2023   | 1                                  | 0                 | 0                                           | 0                 | 0                             | 1                                |
|           | 2024   | 1                                  | 0                 | 0                                           | 0                 | 0                             | 1                                |
| Totals    | 2022   | 0                                  | 1                 | 0                                           | 0                 | 0                             | 1                                |
|           | 2023   | 1                                  | 0                 | 0                                           | 0                 | 0                             | 1                                |
|           | 2024   | 1                                  | 0                 | 0                                           | 0                 | 0                             | 1                                |

Source: Item 20 — Outlets and Franchisee Information (FDD pages 81–84)

Question 3

For Caption By Hyatt, what was the primary source of revenue recognized during the years ended December 31, 2024 and December 31, 2023 that was included in the contract liabilities balance at the beginning of each year?

Accepted Answer

357 | ⁽¹⁾ The change from December 31, 2023 is due to balances written off to gains (losses) on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2024 as a result of the UVC Transaction (see Note 4). Revenue recognized during the years ended Decembe Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 4

What is the total dollar amount of equity method investments listed for Caption By Hyatt?

Accepted Answer

| Juniper Hotels Limited 38.8 % | $ 76 | $ |
|---|---|---|
| HP Boston Partners, LLC 50.0 % | 20 |  |
| Hotel am Belvedere Holding GmbH & Co KG 50.0 % | 15 |  |
| HRM HoldCo, LLC 50.0 % | 15 |  |
| HC Lenox JV Holdings LLC 50.0 % | 15 |  |
| Atona Impact Fund LP 49.8 % | 12 |  |
| Hotel Hoyo Uno, S. de R.L. de C.V. 40.0 % | 7 |  |
| Denver Downtown Hotel Partners LLC 50.0 % | 5 |  |
| H.E. Philadelphia HC Hotel, L.L.C. 40.0 % | 5 |  |
| Hyatt of Baja, S. de. R.L. de C.V. — % | — |  |
| Other | 19 |  |
| Total equity method investments $ 189 $ 2 |  |  |

Source: Item 23 — Receipts (FDD pages 85–349)

Question 5

What is the total projected number of new company-owned Caption By Hyatt outlets planned for the next fiscal year across California and Tennessee?

Accepted Answer

-------------------------|---------------------------------------------------------------|------------------------------------------------------------------|
| State | Franchise Agreements | Projected New | Projected New |
|  | Signed But Outlet Not | Franchised Outlet In | Company-Owned Outlet |
|  | Opened | The Next Fiscal Year | In the Next Fiscal Year |
| California | 2                                                       | 0                                                             | 0                                                                |
| Tennessee  | 1                                                       | 0                                                             | 0                                                                |
| Total      | 3                                                       | 0                                                             | 0                                                                |

Exhibit G is a list of Brand Hotel franchisees as of December 31, 2024 and the addresses and telephone numbers of each of their outlets.

Source: Item 20 — Outlets and Franchisee Information (FDD pages 81–84)

Question 6

What is the total reported revenue for the Caption By Hyatt brand after eliminations?

Accepted Answer

|                               | Management and franchising | Owned and leased | Distribution | Segment Total | Eliminations |         | Total |
|-------------------------------|----------------------------------|---------------------|--------------|------------------|--------------|---------|-------|
| Total revenues                | $ 3,591                      | $ 1,263         | $ 1,123  | $ 5,977      | $           | (86) $ | 5,891 |

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 7

How does the application fee for a Caption By Hyatt franchise (Item 5) compare for new developments versus change of ownership, and how does this relate to the estimated initial investment (Item 7)?

Accepted Answer

5**

# **INITIAL FEES**

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is \$95,000 plus an additional \$500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of \$150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a \$7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of \$500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

Question 8

How does the application fee for a Caption By Hyatt franchise (Item 5) relate to the estimated initial investment (Item 7) and the ongoing fees (Item 6)?

Accepted Answer

5**

# **INITIAL FEES**

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is \$95,000 plus an additional \$500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of \$150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a \$7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of \$500 multiplied by the number of additional guest rooms

Question 9

How does the application fee for a Caption By Hyatt franchise (Item 5) relate to the ongoing fees the franchisee must pay (Item 6)?

Accepted Answer

Training for Hyatt Proprietary Systems

We will provide the IT project management services, which are described in Exhibit E of the Franchise Agreement, relating to the opening of the Hotel (the "IT Project Management Services"). Our performance is dependent on your timely, accurate and effective performance of all responsibilities listed in Exhibit E to the Franchise Agreement. These services include blueprint review and IT project management and planning and installation, configuration and training services for Hyatt proprietary systems. You must pay us a non-refundable fee of \$58,300 for a Hotel with up to 250 guest rooms, and you must reimburse us or our affiliate for our or its reasonable expenses in rendering the IT Project Management Services, including any necessary transportation, lodging and meals (which we anticipate will range from \$6,695 to \$11,330), plus applicable taxes. If your Hotel is larger than 250 guest rooms, we may require a larger IT Project Management Services fee, which we and you would agree on before signing the Franchise Agreement. We will invoice you for the IT Project Management Services fee (including expenses)

![](_page_17_Picture_0.jpeg)

on or after we complete an IT Project Management Service or upon your termination of the Hotel development project or the IT Project Management Services, for any reason, in either event regardless of whether we have approved the Hotel for opening.

## Additional Pre-Opening Advisory Services

You may request, or we may determine that you need, additional guidance, services or assistance during the pre-opening period concerning the development, construction, or inspection and approval process that is beyond what we typically provide to similarly situated Brand Hotels. We may determine you need additional pre-opening services under certain circumstances, including if the Hotel is a conversion of an existing structure to a Brand Hotel (rather than a newlyconstructed facility), if one of our affiliates previously managed the Hotel, or if you (or your owners or operators) lack prior experience or familiarity with the System. If we agree to provide this additional guidance and advice (for example, making more than a reasonable number of visits to the Hotel during the development and construction period), then you must pay our then current fees for our services. The costs of these fees will vary depending on the additional guidance or service you request or we determine you need, but we estimate that you may pay between \$0 and \$250,000 for additional services or guidance before the Hotel opens.

Question 10

Besides select service, lifestyle hotels under the Caption By Hyatt brand, what other types of hotel franchises has Hyatt Franchising, L.L.C. offered?

Accepted Answer

We have offered franchises for select service, lifestyle hotels under the Caption by Hyatt® brand since September 2019. We have offered franchises for full service, lifestyle hotels under the Hyatt Centric® brand since February 2015. We offered franchises for full service hotels under the Hyatt Regency® name from December 1994 until April 1997 and have again offered those franchises since September 2006. We offered franchises for full service hotels under the Hyatt® name (without a sub-brand) from December 1994 until April 1997 and again from September 2006 until January 2015. We previously offered (but no longer intend to offer) franchises for full service hotels under the Thompson® name from December 2018 to August 2021. There currently are 9 full service hotels which operate under the Hyatt name (without a sub-brand), 7 of which are franchised. We also have offered franchises for unique, up-scale accommodations and hospitality affiliations operating in the United States under their own names but associated with The Unbound Collection by Hyatt® name since June 2016. We began offering franchises for "lifestyle" hotels operating in the United States under the brand names "Destination®" and "joie de vivre®" (also referred to as "JdV®") in May 2019. We now refer to these brands as "Destination by Hyatt®" and "JdV by Hyatt®," respectively. We have offered franchises for upper-midscale, extended stay hotels operating in the United States under the brand name "Hyatt Studios™" since May 2023. We have never offered franchises in any other line of business.

Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 9–14)

Question 11

How does the change of ownership application fee for a Caption By Hyatt franchise (Item 5) compare to the new development application fee, and how does this impact the estimated initial investment (Item 7)?

Accepted Answer

[Item 5: Initial Fees]

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

---

[Item 7: Estimated Initial Investment]

| . Type of expenditure | Amount | Method of Payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| New development application fee or change of ownership application fee(1) | $95,000 to $150,000 | Lump sum | Upon signing franchise application | Us |

Question 12

How does the change of ownership application fee for a Caption By Hyatt franchise (Item 5) relate to the estimated initial investment (Item 7), the ongoing fees (Item 6), and the franchisor's assistance (Item 11)?

Accepted Answer

[Item 5: Initial Fees]

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

[Item 6: Other Fees]

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Transfer fee | No fee for transfers, but you or the transferee must pay the then- current amount of the change of ownership application fee | Together with transfer application | Applies to control transfers. We will refund the change of ownership application fee paid (less $7,500) if we disapprove transfer |

[Item 22: Contracts]

12.4 **Control Transfers**. Franchisee must notify Hyatt in writing at least ten (10) days in advance of Franchisee's listing the Hotel or a direct or indirect Controlling Ownership Interest in Franchisee for sale and promptly send Hyatt all information that Hyatt reasonably requests regarding any proposed sale. In connection with any proposed Control Transfer, Franchisee must submit to Hyatt, on behalf of the proposed transferee, a complete application for a new franchise agreement (the "**Change of Ownership Application**"), accompanied by payment of Hyatt's then current application fee (although no such fee is due if the transfer is to the spouse, child, parent, or sibling of the Owner(s) or from one individual or entity who is an Owner as of the Effective Date to another individual or entity who is an Owner as of the Effective Date) and information concerning any proposed replacement Guarantor. If Hyatt does not approve the Change of Ownership Application and consent to the proposed Control Transfer, Hyatt will refund any application fee paid, less Seven Thousand Five Hundred Dollars ($7,500) for processing costs. Hyatt will process the Change of Ownership Application according to this Section 12.4 and its then current procedures. Hyatt has sixty (60) days from its receipt of the completed and signed Change of Ownership Application to consent or withhold its consent to the proposed Control Transfer. No Control Transfer may occur without Hyatt's prior written consent.

Question 13

How does the change of ownership application fee for a Caption By Hyatt franchise (Item 5) relate to the estimated initial investment (Item 7), the ongoing fees (Item 6), the franchisor's assistance (Item 11), and the franchisee's territory (Item 12)?

Accepted Answer

[Item 5: Initial Fees]

## **Item 5**

# **INITIAL FEES**

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

## PIP Preparation Fee

If you are converting an existing structure to a Brand Hotel, you will pay us a nonrefundable fee of $10,000 for our preparation of the Property Improvement Plan (the "PIP"), which

![](_page_16_Picture_0.jpeg)

will detail the improvements necessary to renovate the structure to a Brand Hotel, at the time you submit your franchise application and the application fee.

## Operator Approval and Onboarding

If you or the management company that you select to operate the Hotel is not already an approved operator of Brand Hotels, you or the management company must complete our operator approval and onboarding program. Currently, the entry fee for this program is $10,000 for 2 participants, plus re-entry fees up to $10,000 if you fail to successfully complete any stage of the program. Any additional participants beyond 2 will be charged a fee of $2,500 per participant. We may periodically increase the fees for this program.

## Comfort Letter Fee

---

[Item 6: Other Fees]

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Transfer fee | No fee for transfers, but you or the transferee must pay the then- current amount of the change of ownership application fee | Together with transfer application | Applies to control transfers. We will refund the change of ownership application fee paid (less $7,500) if we disapprove transfer |

---

[Item 7: Estimated Initial Investment]

| . Type of expenditure | Amount | Method of Payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| New development application fee or change of ownership application fee(1) | $95,000 to $150,000 | Lump sum | Upon signing franchise application | Us |

Question 14

How does the change of ownership application fee for a Caption By Hyatt franchise (Item 5) relate to the estimated initial investment (Item 7), the ongoing fees (Item 6), the franchisor's assistance (Item 11), the franchisee's territory (Item 12), and the franchisor's potential financial assistance (Item 10)?

Accepted Answer

[Item 5: Initial Fees]

## **Item 5**

# **INITIAL FEES**

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

## PIP Preparation Fee

If you are converting an existing structure to a Brand Hotel, you will pay us a nonrefundable fee of $10,000 for our preparation of the Property Improvement Plan (the "PIP"), which

![](_page_16_Picture_0.jpeg)

will detail the improvements necessary to renovate the structure to a Brand Hotel, at the time you submit your franchise application and the application fee.

## Operator Approval and Onboarding

If you or the management company that you select to operate the Hotel is not already an approved operator of Brand Hotels, you or the management company must complete our operator approval and onboarding program. Currently, the entry fee for this program is $10,000 for 2 participants, plus re-entry fees up to $10,000 if you fail to successfully complete any stage of the program. Any additional participants beyond 2 will be charged a fee of $2,500 per participant. We may periodically increase the fees for this program.

## Comfort Letter Fee
[Item 6: Other Fees]
---

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| General Manager University | Currently $2,700 per newly hired or promoted general manager, but could increase if costs increase | As incurred | Required training program for all newly hired or recently promoted general managers. In addition to the fee for attendance, you must pay the travel, lodging and other expenses for your attendees |
| Operator approval fee and re-entry fees | Currently $10,000 to $20,000, but could increase | Before the new management company enters our operator screening process | Applies if you appoint a new management company to operate the Hotel if that new management company is not already an approved operator of Brand Hotels |
| Transfer fee | No fee for transfers, but you or the transferee must pay the then- current amount of the change of ownership application fee | Together with transfer application | Applies to control transfers. We will refund the change of ownership application fee paid (less $7,500) if we disapprove transfer |
| Fee for review of offering materials | $5,000 | When submitting materials for our review | Due only if you or your owners propose offering of ownership interests in you or an owner |
| PIP fee for conversion of existing structure or for successor franchise | Then current PIP fee – currently $10,000, but could increase | With franchise application for conversion of an existing structure or a successor franchise | Due only if you are converting an existing structure to a Brand Hotel or applying for a successor franchise |
| Royalty fee upon termination | $5,000 per day plus our costs and expenses | As incurred | Due only if, and while, you fail to properly de-identify the Hotel after expiration or termination |
| Liquidated damages upon termination | See Note 6 | 15 days after termination | Due if Franchise Agreement terminates before its term expires |
| Audit expenses | Cost of audit | As incurred | Due only if our audit reveals an understatement of 3% or more or if you fail to report on time or willfully underpay amounts |
| Late fee and interest | $225 late fee plus lesser of 1½% per month or the highest rate law allows | As incurred | Late fee is due on all overdue amounts. Interest is due on all amounts more than 7 days late or not available for withdrawal by due date |
| Costs and | Will vary under | As incurred | Due if we prevail in dispute |
| attorneys’ fees | circumstances |  |  |
[Item 7: Estimated Initial Investment]

| . Type of expenditure | Amount | Method of Payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| New development application fee or change of ownership application fee(1) | $95,000 to $150,000 | Lump sum | Upon signing franchise application | Us |
| Comfort letter fee(s) | $0 to $2,500 | Lump sum | When your lender(s) sign a comfort letter with us | Us |
| Alternative Design | $0 to $30,000 | As agreed | As incurred | Us |
| Services Review Fee |  |  |  |  |
| Extension of opening deadline | $0 to $10,000 | As agreed | When you request extension of Hotel opening deadline | Us |
| IT Project Management Services fee and expense reimbursement | $64,995 to $69,630 | As agreed | Before the Hotel opens | Us |
| Signage | $65,000 to $100,000 | As agreed | As incurred | Suppliers |
| Telecommunications systems, security system and Technology System equipment and fees (2) | $638,600 to $777,650 | As agreed | As incurred | Suppliers and Hyatt Corporation |
| Architecture and design | $537,500 to $1,950,000 | As agreed | As incurred | Architects, engineers, designers and other professionals |
[Item 7: Estimated Initial Investment]

# Explanatory Notes

- 1. Application fee. The application fee listed above is for a Brand Hotel with 125 to 300 guest rooms. In Item 5, we describe the application fee and the conditions for its refund.
[Item 22: Contracts]

12.4 **Control Transfers**. Franchisee must notify Hyatt in writing at least ten (10) days in advance of Franchisee's listing the Hotel or a direct or indirect Controlling Ownership Interest in Franchisee for sale and promptly send Hyatt all information that Hyatt reasonably requests regarding any proposed sale. In connection with any proposed Control Transfer, Franchisee must submit to Hyatt, on behalf of the proposed transferee, a complete application for a new franchise agreement (the "**Change of Ownership Application**"), accompanied by payment of Hyatt's then current application fee (although no such fee is due if the transfer is to the spouse, child, parent, or sibling of the Owner(s) or from one individual or entity who is an Owner as of the Effective Date to another individual or entity who is an Owner as of the Effective Date) and information concerning any proposed replacement Guarantor. If Hyatt does not approve the Change of Ownership Application and consent to the proposed Control Transfer, Hyatt will refund any application fee paid, less Seven Thousand Five Hundred Dollars ($7,500) for processing costs. Hyatt will process the Change of Ownership Application according to this Section 12.4 and its then current procedures. Hyatt has sixty (60) days from its receipt of the completed and signed Change of Ownership Application to consent or withhold its consent to the proposed Control Transfer. No Control Transfer may occur without Hyatt's prior written consent.

Question 15

What are the different types of fees a Caption By Hyatt franchisee might encounter (Items 5, 6, and 7) and what are the payment terms for each?

Accepted Answer

## **Item 6**

## **OTHER FEES**

We group the ongoing fees that you will pay to us and other companies in the Hyatt Group when operating the Hotel into 3 categories. The first category includes the fees that the Franchise Agreement specifies. Except as described below, these fees are typically imposed and collected by and payable to us. The second category includes the fees for those System Services that we typically classify as Mandatory Services for Brand Hotels. The third category includes the fees for those System Services that we typically classify as Non-Mandatory Services for Brand Hotels. Depending on the particular circumstances of the Hotel, including its size, location and market positioning, we may reclassify some of the Mandatory Services listed below as Non-Mandatory Services and/or may reclassify some of the Non-Mandatory Services listed below as Mandatory Services for the Hotel. The fees in the second and third group are typically imposed and collected by and payable to Hyatt Corporation. At times we may collect amounts on behalf of our affiliates for services that they provide to franchisees. This Item does not cover the ongoing fees or payments relating to the Hotel's operation that you pay directly to third parties.

Except for the transfer fee, all fees are non-refundable. In some cases we might negotiate some of the fees that some franchisees will pay, such as franchisees agreeing to develop multiple Brand Hotels or acquiring existing Brand Hotels. Otherwise, except as described below, all fees are uniform or are calculated on a uniform basis. There currently are no franchisee advertising cooperatives in the Brand Hotel network.

## **Fees Under the Franchise Agreement**

You will pay these fees to us under the Franchise Agreement.

![](_page_29_Picture_0.jpeg)

- 2. Royalty Fee. Your Royalty Fee will be 5% of Gross Rooms Revenue accrued during the previous month. If you are constructing a new Hotel, we may agree to reduce your Royalty Fee for the first 1-3 years of the Hotel's operations.
- 3. Electronic Payments. You must make all payments for Royalty Fees, System Services Charges, and other amounts due to us or any member of the Hyatt Group under the Franchise Agreement or relating to the Hotel by electronic funds transfer ("EFT") in compliance with System Standards. We periodically may change the procedure for payments. You must make funds available in your account to cover payments when due. You may not change your bank, financial institution, or account used in the operation of the Hotel without first telling us.
- 4. World of Hyatt Program. Brand Hotels must participate in, and pay all charges related to, the Hyatt Group's frequent guest loyalty program (the "Loyalty Program"), called the "World of Hyatt" program. The Hyatt Group assesses each Participating Hotel and certain other hotels an amount in the Hyatt Group's discretion to operate the Loyalty Program, which amount may change periodically. The assessment for each participating Brand Hotel (including the Hotel) is currently 4% of all eligible revenue generated at that hotel from members of the program (excluding applicable taxes) who provide their World of Hyatt member number when booking or 2% of that eligible revenue when a guest is enrolled on-property in World of Hyatt for that enrolling stay.
Franchisee agrees to pay Hyatt a late fee of Two Hundred Twenty-Five Dollars ($225) for each required payment not made on or before its original due date and for each required payment or authorized automatic debit not honored by Franchisee's financial institution.

In addition, all amounts that Franchisee owes Hyatt that are more than seven (7) days late, or that are not available for withdrawal by automatic debit when due (if the amounts are payable by automatic debit), will bear interest accruing as of their original due date at one and one-half percent (1.5%) per month or the highest commercial contract interest rate the law allows, whichever is less.

Franchisee agrees to pay on a timely basis, as and when due, all amounts owed to third parties (including Hyatt's Affiliates) arising out of the Hotel's operation (excluding only amounts owed which are reasonably in dispute), including: (a) applicable commissions to travel agents and third party reservation service charges and otherwise participate in any Hotel System travel agent commission payment program, as Hyatt periodically modifies it; (b) all commissions and fees for reservations Franchisee accepts through any sources (including the Internet), whether processed through Hyatt, the CRS, or any Provider's reservation system or billed directly to Franchisee; (c) all fees and assessments due for guest frequency programs and other marketing programs Hyatt periodically initiates that are attributable to the Hotel; and (d) all contributions for cooperative advertising programs in which Franchisee agrees to participate, as required in Section 5.5.

The Hotel must participate in quality assurance, compliance and guest satisfaction programs that we periodically develop and modify (collectively, the "Quality Assurance and Compliance Program").

You must pay your allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program.

Currently, we impose the following fees for each 6-month FIP stage if the Hotel is placed in or remains in FIP protocols as a result of QA scores below requirements: (i) Stage 1 – $5,000 administrative fee; (ii) Stage 2 – $15,000 administrative fee; and (iii) Stage 3 – $20,000 administrative fee.

In addition, if the Hotel does not achieve passing scores necessary to exit the FIP protocols by the end of Stage 3, the Hotel is placed in our BPP program, which requires the Hotel to pay an administrative fee of $45,000 per year.

We may, as we deem appropriate, reduce or refund FIP fees based on improved performance and/or your accelerated compliance with hotel renovation requirements.

Question 16

What are all the initial fees a Caption By Hyatt franchisee might pay, considering both Item 5 and Item 7?

Accepted Answer

## **Item 5**

# **INITIAL FEES**

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

## PIP Preparation Fee

If you are converting an existing structure to a Brand Hotel, you will pay us a nonrefundable fee of $10,000 for our preparation of the Property Improvement Plan (the "PIP"), which

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will detail the improvements necessary to renovate the structure to a Brand Hotel, at the time you submit your franchise application and the application fee.

## Operator Approval and Onboarding

If you or the management company that you select to operate the Hotel is not already an approved operator of Brand Hotels, you or the management company must complete our operator approval and onboarding program. Currently, the entry fee for this program is $10,000 for 2 participants, plus re-entry fees up to $10,000 if you fail to successfully complete any stage of the program. Any additional participants beyond 2 will be charged a fee of $2,500 per participant. We may periodically increase the fees for this program.

## Comfort Letter Fee

---

[Item 7: Estimated Initial Investment]

# Explanatory Notes

- 1. Application fee. The application fee listed above is for a Brand Hotel with 125 to 300 guest rooms. In Item 5, we describe the application fee and the conditions for its refund.
- 2. Telecommunications systems, security system and Technology System equipment. We include in this estimate the projected costs of acquisition/installation and the annual support and service contracts for the first year that the Hyatt Group provides as part of Mandatory Services.
- 3. Furniture, fixtures, other fixed assets, and equipment. Costs for fixtures, equipment, furnishings, furniture, room equipment and appliances and other items (collectively, "FF&E") depend mostly on the Hotel's size and configuration. This item covers costs for all FF&E for the Hotel except the costs for telecommunications systems, security system and Technology System equipment and related fees that we describe separately in Note 2 above and the OS&E that we describe in Note 4 below.
- 4. Operating Supplies and Equipment. Costs for initial operating supplies and equipment, including initial food and beverage inventory, bed linens, personal care amenities, cleaning supplies, and other consumables and similar items we periodically specify for the Hotel (collectively, "OS&E") depend mostly on the Hotel's size and location. This item does not include the FF&E for the Hotel that we describe in Note 3 above or the costs for telecommunications systems, security system, and Technology System equipment and related fees that we describe in Note 2 above.

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- 5.

General and administrative.

This item includes costs for permit fees, security deposits, utility deposits and startup requirements, impact fees (one-time charges that the government levies to offset service costs relating to the new development), tap fees (charges for connecting to existing water or sewer lines), and various business licenses.

Landlords sometimes pay some of the tap or impact fees, and the amount depends on municipal requirements and the final Hotel configuration.

This item also includes costs for insurance, legal and accounting expenses.

- 6.

Revenue management fees and field marketing program fees.

These items include revenue management program fees and field marketing program fees, respectively, during the preopening period and the first 3 months of operation.

We describe these fees in Item 5.

The total amount you may pay us for pre-opening revenue management services ranges from $0 to $7,000.

We also reserve the right to charge you for reimbursement of expenses reasonably incurred by us, including for transportation and related expenses, printing, photocopying, postage, and delivery services.

We may periodically increase these fees at any time upon 30 days' written notice to you, but we may not increase these fees by more than 10% per calendar year.

## Field Marketing Program

Up to 6 months before the opening of your Hotel, you may elect to receive from the Hyatt Group certain centralized resources to guide and support local integrated marketing for hotels that leverage the expertise of a designated field marketing team for a fee (which may contain a profit component, not to exceed a competitive amount), pursuant to the Field Marketing Program

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Schedule to the Central Services Agreement (the "Field Marketing Program Schedule"). Inclusions and deliverables vary by service level, and may include management of local digital marketing, regional marketing campaigns, website management, social media consultation, local promotion creation and execution, and brand activations. The current nonrefundable monthly subscription fee due under the Field Marketing Program Schedule is dependent on the service tier level then in effect for Tier 1: $996 per month; for Tier 2: $1,867 per month; and for Tier 3: $2,747 per month. The total amount you may pay us for pre-opening field marketing services ranges from $0 to $16,482.

Question 17

What is the range of the new development application fee for a Caption By Hyatt franchise (Item 5) and how does this relate to the total estimated initial investment (Item 7)?

Accepted Answer

| . Type of expenditure | Amount | Method of Payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| New development application fee or change of ownership application fee(1) | $95,000 to $150,000 | Lump sum | Upon signing franchise application | Us |

## Application Fee

You will pay us a lump-sum application fee when you submit the franchise application through our online application portal. If the Hotel is new to the Brand Hotel network, the lumpsum new development application fee is $95,000 plus an additional $500 for each guest room in the Hotel over 200 rooms. If you are purchasing an existing Brand Hotel, you or the transferor will pay us a lump-sum change of ownership application fee of $150,000 when you submit the franchise application through our online application portal. If you withdraw your franchise application before we approve it, or if we do not approve your franchise application for any reason, then we will refund your application fee, less a $7,500 fee to cover our costs for evaluating your application. After we approve your franchise application, the application fee is non-refundable, even if we and you do not sign a Franchise Agreement. If you and we agree to add any guest rooms to the Hotel before the Hotel opens, then you must pay us, when we approve the additional guest rooms, an additional non-refundable application fee of $500 multiplied by the number of additional guest rooms over 200 total guest rooms at the Hotel.

- 11.

Total estimated initial investment (excluding real estate costs).

The estimated amounts presented in the table above are to construct a new, full-size Brand Hotel with 125 to 300 guest rooms, according to the Design and Construction Standards and the Hotel System.

- 1. Application fee. The application fee listed above is for a Brand Hotel with 125 to 300 guest rooms. In Item 5, we describe the application fee and the conditions for its refund.

Question 18

What is the relationship between the application fee for a new Caption By Hyatt hotel (Item 5) and the comfort letter fee (Item 7)?

Accepted Answer

| . Type of expenditure | Amount | Method of Payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| New development application fee or change of ownership application fee(1) | $95,000 to $150,000 | Lump sum | Upon signing franchise application | Us |
| Comfort letter fee(s) | $0 to $2,500 | Lump sum | When your lender(s) sign a comfort letter with us | Us |

Question 19

For a Caption By Hyatt franchise, who is responsible for the installation and configuration of PMS interfaces if this work is not ready for completion while the resource is on site?

Accepted Answer

The following services are not included in the Computing Environment Setup and Configuration Statement of Work:

- Performing upgrades to existing equipment intended for re-use in new hotel opening
- Installing non-standard software or systems hardware outside of hardware detailed above
- Installation and configuration of 'off-brand' hardware or hardware not purchased within Hyatt specification
- Configuration of equipment intended for use beyond our standard configuration (i.e., configuration of redundant/hot-swap devices)
- Configuration of Virtual Machine-based systems, to include the Domain Controller
- Setup and configuration of systems typically configured by respective vendors
- Any and all low-voltage cabling or manufacture of patch cables

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- Purchasing required hardware, software, interfaces and licenses
- Performing training for vendor-specific systems
- Ongoing support of systems and hardware following hotel opening
- Integrating or troubleshooting non-standard Hyatt computer systems
- Provide any physical or logical connection between the administrative network and the guest network
- Installation and configuration of backup software to be used with workstations
- Installation and configuration of PMS interfaces unless this work is ready for completion while resource is on site

Source: Item 22 — Contracts (FDD page 85)

Question 20

Under what condition is a Caption By Hyatt guarantor prohibited from assigning their rights, powers, duties, or obligations under the Guaranty?

Accepted Answer

- 12. **Parties Bound; Assignment**. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives; provided, however, that Guarantor shall not, without the prior written consent of Hyatt, assign any of its rights, powers, duties or obligations hereunder.

Source: Item 22 — Contracts (FDD page 85)

Question 21

According to the FDD, what is the effective date for each amendment under ASU 2023-06 for Caption By Hyatt, assuming the SEC removes the related disclosure by June 30, 2027?

Accepted Answer

*Disclosure Improvements*—In October 2023, the FASB issued Accounting Standards Update No. 2023-06 ("ASU 2023-06"), *Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative*. ASU 2023-06 modifies the disclosure and presentation requirements for certain FASB Accounting Standards Codification topics to align with the SEC's regulation. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from its regulations becomes effective, if the SEC removes the disclosure by June 30, 2027. The provisions of ASU 2023-06 are to be applied prospectively, with early adoption prohibited. We do not expect the adoption of ASU 2023-06 to have a material impact on our consolidated financial statements and accompanying Notes.

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 22

According to the Caption By Hyatt Franchise Agreement, under what conditions will the fee for services fluctuate monthly?

Accepted Answer

The fee for the Services is a portion of and included in the System Services Charges (as defined in the Franchise Agreement). The fee for the Services will fluctuate monthly, subject to Section 6b of this Agreement.

Source: Item 23 — Receipts (FDD pages 85–349)

Question 23

What action can Caption By Hyatt take if the F&B Operator fails to operate in full compliance with applicable laws and System Standards?

Accepted Answer

You must ensure that all F&B Operations operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards. You must provide, or cause the management company to provide, all brand standard training programs to the F&B Operator that we periodically specify. If the F&B Operator at any time fails to operate in full compliance with all applicable laws, rules and regulations and all applicable System Standards, or fails to comply with any agreement with us, then, without limiting our other rights and remedies under the Franchise Agreement and applicable law, we may revoke our approval of the F&B Operator. You then must promptly terminate your arrangement with the F&B Operator and either assume (if we approve you to manage the Hotel) or have your approved management company assume direct control of the Hotel's F&B Operations or engage another approved F&B Operator we approve.

Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 71–74)

Question 24

Is the Agency Oversight service in Caption By Hyatt's Field Marketing Program applicable if the Property is working with an in-house marketing team?

Accepted Answer

- **Agency Oversight** Manager to join up to Choose an item. to provide strategic recommendations for paid media, outside of Top-Up, to include paid search, display and social media, including budget recommendations and performance review (only applicable if Property is working with a third party outside agency).

Source: Item 23 — Receipts (FDD pages 85–349)

Question 25

Where will arbitration take place for disputes involving Caption By Hyatt in North Dakota, according to the North Dakota Franchise Investment Law?

Accepted Answer

3. The "Summary" section of Item 17(u) of the Franchise Disclosure Document, titled **Dispute resolution by arbitration or mediation**, is deleted and replaced with the following:

Except for certain claims, we and you must arbitrate all disputes at a location the arbitrator chooses within 10 miles of our then current principal business address;

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however, to the extent required by the North Dakota Franchise investment Law (unless preempted by the Federal Arbitration Act), we and you will arbitrate at a site to which we and you mutually agree.

Source: Item 23 — Receipts (FDD pages 85–349)

Question 26

What is the average cost per reservation for global distribution services and other reservation services for a Caption By Hyatt franchise, and under what conditions could this cost increase?

Accepted Answer

ccept, which currently

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averages approximately \$8.50 per reservation, and the Hyatt Group passes on the charge to the hotel receiving the reservation at cost without imposing a markup or receiving a profit.

The Commercial Services Fee and these other reservation services fees include some of the current charges from providers of products or services for the Hotel, including the then current CRS operator (if applicable), the then current GDS and ADS operators (if applicable) and other suppliers to the Hotel, which may include us and/or our affiliates (collectively, "Providers"), that we currently collect from franchisees and pay (on their behalf) to the Providers. If any Provider assesses a single or group fee or other charge that covers all or a group of Brand Hotels or other Hyatt Network Hotels to which that Provider provides products or services, then our calculation of that fee or other charge among the Hotel and other Participating Hotels is final. The Providers may periodically increase the fees and other charges they impose. At our option, you must begin paying these fees and o

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 27

How is 'Average Monthly Revenues' calculated for a Caption By Hyatt hotel if the termination occurs before the Opening Date?

Accepted Answer

Notwithstanding the foregoing, if "Average Monthly Revenues" as determined pursuant to any part of (a) through (c) above has been materially and negatively impacted during the preceding twelve (12) full calendar month period by a disruption in Hotel operations resulting from Force Majeure, casualty, suspension of operations (whether or not consented to by Hyatt), renovation of the Hotel, or any other similar circumstances, "Average Monthly Revenue" shall be determined by reference to the most recent twelve (12) full calendar month period preceding termination during which the Hotel performance was not so impacted.

Source: Item 22 — Contracts (FDD page 85)

Question 28

In calculating 'Average Monthly Revenues' for a Caption By Hyatt hotel, what happens if there's a casualty that disrupts hotel operations?

Accepted Answer

Notwithstanding the foregoing, if "Average Monthly Revenues" as determined pursuant to any part of (a) through (c) above has been materially and negatively impacted during the preceding twelve (12) full calendar month period by a disruption in Hotel operations resulting from Force Majeure, casualty, suspension of operations (whether or not consented to by Hyatt), renovation of the Hotel, or any other similar circumstances, "Average Monthly Revenue" shall be determined by reference to the most recent twelve (12) full calendar month period preceding termination during which the Hotel performance was not so impacted.

Source: Item 22 — Contracts (FDD page 85)

Question 29

Does the Commercial Services Fee for Caption By Hyatt include charges for centralized reservation services, and if so, are these charges dependent on the channel used?

Accepted Answer

The "Commercial Services Fee" currently covers the costs for the following commercial services that the Hyatt Group makes available to the Hotel and other Participating Hotels (the "Commercial Services"):
  - (a) brand-wide marketing, advertising, public relations, and guest satisfaction program management and research for the Hotel;
  - (b) base Global Property and Guest Services which provide, among other things, centralized reservation services (including the services and charges for the base reservation fee, which applies regardless of channel, and certain additional reservation fees based on channels) and care professionals supporting the business by enhancing the guest experience;

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 30

What are the components of the late fee and interest charges for overdue amounts related to a Caption By Hyatt franchise, and when are they applied?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Late fee and interest | $225 late fee plus lesser of 1½% per month or the highest rate law allows | As incurred | Late fee is due on all overdue amounts. Interest is due on all amounts more than 7 days late or not available for withdrawal by due date |

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 31

What is the condition for the automatic termination of the Digital Ancillary Services Program Schedule for Caption By Hyatt?

Accepted Answer

This Schedule may be terminated as follows: - a. Either party may terminate this Schedule for any reason or no reason by notifying the other party in writing at least days ninety (90) days in advance. Notwithstanding the foregoing, in the event of termination by Owner pursuant to this subsection a. the effective date of such termination shall be no earlier than [Insert Date]³ ; - b. This Schedule shall automatically terminate if (i) the Franchise Agreement expires or is terminated and Owner does not enter into a franchise agreement, hotel management agreement or hotel services agreement with Hyatt or its affiliate such that the Property continues to operate under a Hyatt brand or affiliation immediately following termination, or (ii) the Central Hotel Services by Hyatt Master Agreement expires or is terminated; and/or - c. If either party commits a material breach of any provision of this Schedule and has failed to cure such breach within ten (10) days of receiving written notice, the other party may terminate this Schedule immediately upon written notice. Upon termination of this Schedule, Owner shall remit to Hyatt payment for Services rendered through the effective date of termination. Source: Item 23 — Receipts (FDD pages 85–349)

Question 32

What conditions must be met for a Caption By Hyatt franchisee's owners to transfer non-Controlling Ownership Interests without franchisor approval?

Accepted Answer

ny interest in Franchise Agreement, the Hotel or substantially all of its assets, or you or your owners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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| Provision                                                                        | Section in franchise or other agreement                                                                               | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l. Franchisor approval of transfer by franchisee                        | 12.2 to 12.5 of Franchise Agreement; 12 of Hosting Services Agreement; 13 of Central Services Agreement   | No transfers of Franchise Agreement, the Hosting Services Agreement, the Central Services Agreement, the Hotel or its assets, or Controlling Ownership Interests without our approval. However, you may mortgage hotel to lender and your owners may transfer ownership interests for estate planning purposes.

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 75–81)

Question 33

What conditions trigger the audit expenses for a Caption By Hyatt franchise, and how are these expenses determined?

Accepted Answer

ject to availability) during the inspection period. If we determine that the Hotel is not complying with the Hotel System, System Standards, or any other Franchise Agreement provisions, then you will pay or bear the cost of the Hotel's allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program to correct the noncompliance. This includes (a) reimbursing our costs related to your non-compliance, such as travel and living expenses, guest satisfaction payments or expenses, and other costs for administering any necessary actions, follow-up inspections, audits or re-evaluation visits until you have fully corrected the non-compliance, (b) paying for meetings and additional brand standards training programs that we specify and require your personnel to attend relating to your non-compliance, and (c) paying program fees which we and/or our affiliates may use to promote guest satisfaction initiatives for Hyatt Network Hotels. These amounts will vary depending on the extent of your non-compliance and may increase if our costs increase. Currently, we impose the following fees for each 6-month FIP stage if the Hotel is placed in or remains in FIP protocols as a result of QA scores below requirements: (i) Stage 1 – \$5,000 administrative fee; (ii) Stage 2 – \$15,000 administrative fee; and (iii) Stage 3 – \$20,000 administrative fee. In addition, if the Hotel does not achieve passing scores necessary to exit the FIP protocols by the end of Stage 3, the Hotel is placed in our BPP program, which requires the Hotel to pay an administrative fee of \$45,000 per year. We may, as we deem appropriate, reduce or refund FIP fees based on improved performance and/or your accele

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 34

What are the conditions under which a Caption By Hyatt franchisee may subcontract the management of Spa Operations to a Spa Operator?

Accepted Answer

If the Hotel has Spa Operations, Franchisee may subcontract the management of the Spa Operations to a Spa Operator only if (i) Hyatt (in its sole judgment) approves of the Spa Operator, the spa concept and the terms of the lease or other arrangement between Franchisee and the Spa Operator; (ii) the Spa Operator complies with all applicable System Standards; and (iii) the spa does not use the Proprietary Marks in any manner (unless Hyatt authorizes such use in writing).

Source: Item 22 — Contracts (FDD page 85)

Question 35

When does the confidentiality obligation of the Company with respect to a Hyatt Trade Secret continue until, even after the termination of the Caption By Hyatt agreement?

Accepted Answer

Except as otherwise set forth herein, the obligations set forth in this Agreement shall terminate upon the execution of definitive agreements between the parties with respect to the Transaction or two (2) years from the date of this Agreement, whichever occurs first; *provided, however*, that notwithstanding the termination of this Agreement, the confidentiality obligations of the Company with respect to a Hyatt Trade Secret shall continue until the later of (i) five (5) years from the date of this Agreement, and (ii) until such time that Hyatt has provided notice that the Hyatt Trade Secret is no longer deemed by Hyatt to be a trade secret.

Source: Item 23 — Receipts (FDD pages 85–349)

Question 36

In the context of a Caption By Hyatt franchise, what happens if the franchisee receives proceeds from business interruption insurance applicable to room rentals?

Accepted Answer

If Franchisee receives any proceeds from any business interruption insurance applicable to the rental of rooms at the Hotel, then there shall be added to Gross Rooms Revenue an amount equal to the imputed gross revenues that the insurer used to calculate those proceeds.

Source: Item 22 — Contracts (FDD page 85)

Question 37

For a damaged Caption By Hyatt Hotel, what is the Franchisee's obligation if the repair cost is less than or equal to the Damage Threshold?

Accepted Answer

- 10.2 **Damage**.

If the Hotel is damaged by fire, flood, accident, hurricane or other casualty, Franchisee must notify Hyatt immediately.

- (a) If the cost to repair the damage is less than or equal to the Damage Threshold, then Franchisee must repair the damage promptly according to the System Standards and this Agreement's other terms and conditions.

If the damage or repair requires Franchisee to close all or any portion of the Hotel, then Franchisee must commence reconstruction as soon as practicable (but in any event within four (4) months) after closing the Hotel and reopen for continuous business operations as a Brand Hotel as soon as practicable (but in any event within twenty-four (24) months) after closing the Hotel, but not without complying with this Agreement's other terms and conditions.

The Term will be extended for the period of time during which the Hotel is closed pursuant to this Section 10.2(a), and Franchisee need not make any payments of Royalty Fees or System Services Charges while the Hotel is closed pursuant to this Section 10.2(a) unless Franchisee receives insurance proceeds compensating Franchisee for lost Gross Rooms Revenue during such period, in which case Franchisee must pay Royalty Fees and System Services Charges on the amount of proceeds received allocable to such loss.

Source: Item 22 — Contracts (FDD page 85)

Question 38

What is the dependency for the Digital Ancillary Services Program Schedule's effectiveness for a Caption By Hyatt franchise?

Accepted Answer

This Digital Ancillary Program Schedule ("**Schedule**") is made effective as of [INSERT DATE] ("**Schedule Effective Date**") subject to and part of the Central Hotel Services by Hyatt Master Agreement entered into by the parties listed in the signature block below. All capitalized terms not defined herein shall have the meaning ascribed to them in the Central Hotel Services by Hyatt Master Agreement or the Franchise Agreement, as applicable.

The Services under this Schedule shall be effective commencing on such date as Hyatt may designate in writing to Owner (email shall suffice) and, if no date is specifically designated by Hyatt in writing, then commencing on the first day of the first quarter that is at least thirty (30) days following the Schedule Effective Date ("**Service Effective Date**") and continuing until terminated in accordance with this section. From the Service Effective Date until this Schedule is terminated or until this Schedule is replaced with an Updated Services Schedule that sets forth new Services or Fees, each party shall fulfill its obligations hereunder. Owner acknowledges that Hyatt may update the Services and related prices at any time by providing the Property an Updated Services Schedule at least ninety (90) days in advance, which may be provided electronically via email or by posting to any intranet for Hyatt branded or affiliated hotels. Owner agrees to be responsible for any subsequently updated Fees as listed on an Updated Services Schedule.

This Schedule may be terminated as follows:

Source: Item 23 — Receipts (FDD pages 85–349)

Question 39

What is the dependency between Hyatt's approval of a Management Company and the Management Company Documents for a Caption By Hyatt Hotel?

Accepted Answer

- (b) **Management Company Documents**. As a condition of Hyatt's approval of any Management Company, the Management Company must (i) sign the documents Hyatt requires to protect its intellectual property rights and to reflect the Management Company's agreement to perform its management responsibilities and otherwise operate the Hotel in compliance with this Agreement (collectively, the "**Management Company Documents**"); and (ii) attend and successfully complete Hyatt's designated then current operator training programs for Brand Hotels, if any. The current version of the Management Company Documents is attached as Exhibit F. Hyatt may refuse to approve a Management Company that is a Competing Brand Owner. If Hyatt has approved a Management Company as of the Effective Date, or if Hyatt has approved Franchisee to manage the Hotel as of the Effective Date, then the approved Management Company (if applicable) is listed on Exhibit B-1.

Source: Item 22 — Contracts (FDD page 85)

Question 40

What is the dependency between satisfying the Guarantor Monetary Threshold and the continuation of the Franchise Agreement for a Caption By Hyatt franchise?

Accepted Answer

- (f) Franchisee fails to ensure that at least one Guarantor satisfies the Guarantor Monetary Threshold and does not cure that default (by providing the financial statements demonstrating that at least one Guarantor then satisfies the Guarantor Monetary Threshold) within sixty (60) days after delivery of Hyatt's written notice of default to Franchisee.

- 15.2 **Termination by Hyatt Without Opportunity to Cure**.

Hyatt may terminate this Agreement immediately, without giving Franchisee an opportunity to cure the default, effective upon delivery of written notice to Franchisee (or such later date as required by law), if:

Source: Item 22 — Contracts (FDD page 85)

Question 41

Are dissolutions or transfers from trusts or other entities holding an Owner's interest in a Caption By Hyatt franchise subject to any terms and conditions?

Accepted Answer

Dissolution of or transfers from any trust or other entity described in this Section 12.5(b) are subject to all applicable terms and conditions of Section 12.3 or 12.4.

Source: Item 22 — Contracts (FDD page 85)

Question 42

On what factors does the amount, interest rate, and repayment terms of Caption By Hyatt's financial assistance depend?

Accepted Answer

er | Exhibit C of Franchise Agreement | 17 |

# **Item 10**

## **FINANCING**

We do not have a fixed financial assistance program for our franchisees and typically do not offer financial assistance to franchisees. However, in some cases we periodically may offer financial assistance to franchisees developing new Brand Hotels or converting existing hotels from

![](_page_47_Picture_0.jpeg)

other brands to the Hotel System. We have no formal criteria to determine which franchisees will receive financial assistance or the amount or timing of the assistance. The terms of any financial assistance, including amount, interest rate, and repayment terms, will vary widely and depend on our agreement with the franchisee and its particular circumstances. Our decision to offer financial assistance depends on what we think is best for us and the Brand Hotel franchise network.

Source: Item 10 — Financing (FDD pages 47–48)

Question 43

What factors determine the amount of the make-whole payment for Senior Notes redeemed early by Caption By Hyatt?

Accepted Answer

We may redeem some or all of the Senior Notes at any time prior to their maturity at a redemption price equal to 100% of the principal amount of the Senior Notes

![](_page_133_Picture_0.jpeg)

redeemed plus accrued and unpaid interest, if any, to the date of redemption plus a make-whole amount, if any. The amount of any make-whole payment depends, in part, on the yield of U.S. Treasury securities with a comparable maturity to the Senior Notes at the date of redemption.

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 44

What factors determine whether a Caption By Hyatt franchisee receives an Area of Protection if the hotel is an operating Brand Hotel?

Accepted Answer

If the Hotel is an operating Brand Hotel, you may not receive any Area of Protection or AOP Term when signing the Franchise Agreement. We will make the determination of whether to provide any Area of Protection based on the time during which the Hotel has operated under the "Caption by Hyatt®" name and the market conditions under which the Hotel operates.

Source: Item 12 — Territory (FDD pages 65–67)

Question 45

What factors influence Caption By Hyatt's decision to offer financial assistance?

Accepted Answer

We do not have a fixed financial assistance program for our franchisees and typically do not offer financial assistance to franchisees. However, in some cases we periodically may offer financial assistance to franchisees developing new Brand Hotels or converting existing hotels from

![](_page_47_Picture_0.jpeg)

other brands to the Hotel System. We have no formal criteria to determine which franchisees will receive financial assistance or the amount or timing of the assistance. The terms of any financial assistance, including amount, interest rate, and repayment terms, will vary widely and depend on our agreement with the franchisee and its particular circumstances. Our decision to offer financial assistance depends on what we think is best for us and the Brand Hotel franchise network. We have no obligation to offer financial assistance to any franchisee.

Source: Item 10 — Financing (FDD pages 47–48)

Question 46

What factors influence the decision to repurchase shares of Caption By Hyatt common stock?

Accepted Answer

esenting approximately 2.4% of the outstanding shares of our common stock and approximately 3.9% of the total voting power of our outstanding common stock. Pursuant to the 2007 Stockholders' Agreement, these entities have also agreed to certain voting agreements and to certain limitations with respect to the sale of shares of our common stock.

**Share Repurchase**—On December 18, 2019, May 10, 2023, and May 8, 2024 our board of directors authorized repurchases of up to \$750 million, \$1,055 million, and \$1,000 million, respectively, of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an ASR transaction, at prices we deem appropriate and subject to market conditions, applicable law, and other factors deemed re

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 47

Does the Caption By Hyatt FDD allow for supplemental financial performance information to be provided under particular circumstances?

Accepted Answer

Hyatt expressly disclaims making, any representation, warranty or guaranty, express or implied, as to the actual or potential volume, sales, income or profits of the Hotel or any other Brand Hotel, and any information Franchisee has acquired from other Brand Hotel owners, including information regarding their sales, profits or cash flows, is not information obtained from Hyatt, and Hyatt makes no representation about that information's accuracy.

- (c) Franchisee represents, warrants and acknowledges that it has no knowledge of any representations made about the Brand Hotel franchise opportunity by Hyatt, its Affiliates or any of their respective officers, directors, managers, owners or agents that are contrary to the statements made in Hyatt's franchise disclosure document or to the terms and conditions of this Agreement.
- (d) Franchisee represents, warrants and acknowledges that it is relying solely on Hyatt, and not on any Affiliate of Hyatt, with regard to Hyatt's financial and other obligations under this Agreement, and no employee or other person speaking on behalf of, or otherwise representing, Hyatt has made any statement or promise to the effect that Hyatt's Affiliates guarantee Hyatt's performance or financially back Hyatt.
- 19.3 **No Waiver or Disclaimer of Reliance in Certain States**. The following provision applies only to franchisees and franchises that are subject to state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:

No statement, questionnaire, or acknowledgement signed or agreed to by Franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by Hyatt, any franchise seller, or any other person acting on behalf of Hyatt. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 19 — Financial Performance Representations (FDD page 81)

Question 48

What is the financial obligation for a Caption By Hyatt franchisee if they build a hotel of the same type within the Area of Protection within 24 months of termination due to condemnation, excluding Hyatt Network Hotels or hotels already under contract?

Accepted Answer

10.1 **Condemnation**. Franchisee must immediately notify Hyatt of any proposed taking all or a substantial portion of the Hotel by eminent domain, condemnation or expropriation. If the parties do not otherwise agree to relocate the Hotel, then either party may terminate this Agreement immediately upon written notice to the other. If Franchisee and its Owners sign a Termination Agreement, then Franchisee shall not be required to pay liquidated damages pursuant to Section 16.5 at the time of termination. However, such Termination Agreement shall provide that if Franchisee or any of its Affiliates begins construction on or operation of a hotel of the same Hotel Type at any location within the Area of Protection at any time during the twenty-four (24)

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month period following the effective date of termination of this Agreement, other than a Hyatt Network Hotel or a hotel that was already under contract to be developed at that particular location within the Area of Protection on the date that the Termination Agreement is signed, then Franchisee or its Owners must pay Hyatt liquidated damages equal to the amount set forth in Exhibit B-1 multiplied by the number of guest rooms in that new hotel of the same Hotel Type. If Franchisee and its Owners fail to sign such Termination Agreement within a reasonable time after Hyatt delivers it to Franchisee, then Franchisee must pay Hyatt liquidated damages pursuant to Section 16.5 at the time of termination, in addition to complying with its other post-termination obligations under this Agreement.

Source: Item 22 — Contracts (FDD page 85)

Question 49

Does the Caption By Hyatt franchise agreement include an exhibit outlining IT Project Management Services, and if so, what is the exhibit letter?

Accepted Answer

# **EXHIBIT E to the BRAND HOTEL FRANCHISE AGREEMENT**

# **IT PROJECT MANAGEMENT SERVICES**

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#### **[SELECT SERVICE]**

## **HYATT IT PROJECT MANAGEMENT SERVICES AND IMPLEMENTATION AND TRAINING FOR HYATT PROPRIETARY SYSTEMS**

#### 1. Scope of Services, Part 1

IT Project Management Services - The overall process includes a Blueprint Review and IT Project Management & Planning. Listed below are the activities for each component which are included in the IT Project Management Services fee.

---

- (b) **Franchisee Responsibilities**.

Franchisee agrees to perform, in a timely manner, the tasks identified as Franchisee's responsibilities in Exhibit E.

Franchisee acknowledges that Hyatt's performance of the IT Project Management Services is dependent on Franchisee's timely, accurate, and effective performance of all Franchisee's responsibilities set forth in Exhibit E, including providing written notice to Hyatt of Franchisee's designated representative.

Franchisee further acknowledges and agrees that its failure to perform may prevent or delay Hyatt's performance of the IT Project Management Services and/or require modifications to the services performed, including an adjustment to the scope of work, completion schedule or fees.

- (d) **Hyatt Limited Warranty**.

Hyatt warrants that the IT Project Management Services will be performed in substantial accordance with the specifications set forth in Exhibit E.

If any IT Project Management Services do not comply with this warranty, Franchisee must notify Hyatt in writing within thirty (30) days after completion of the IT Project Management Services.

As to any valid warranty claim, Hyatt will at its option: (i) repair the defect; (ii) re-perform the defective IT Project Management Services; or (iii) refund sums paid by Franchisee to Hyatt for the defective IT Project Management Services.

Following expiration of the warranty period, Franchisee accepts the IT Project Management Services in their "AS-IS" condition.

Source: Item 22 — Contracts (FDD page 85)

Question 50

For a Caption By Hyatt franchise, is the Area of Protection guaranteed if the hotel is an operating Brand Hotel?

Accepted Answer

If the Hotel is an operating Brand Hotel, you may not receive any Area of Protection or AOP Term when signing the Franchise Agreement. We will make the determination of whether to provide any Area of Protection based on the time during which the Hotel has operated under the "Caption by Hyatt®" name and the market conditions under which the Hotel operates.

Source: Item 12 — Territory (FDD pages 65–67)

Question 51

For a Caption By Hyatt franchise, can the franchisor reclassify Mandatory Services as Non-Mandatory Services, or vice versa, depending on the hotel's circumstances?

Accepted Answer

Depending on the particular circumstances of the Hotel, including its size, location and market positioning, we may reclassify some of the Mandatory Services listed below as Non-Mandatory Services and/or may reclassify some of the Non-Mandatory Services listed below as Mandatory Services for the Hotel.

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 52

For a Caption By Hyatt franchise, if the applicant, franchisee, guarantor, or any partner, shareholder, member, officer, or director of any of them has been adjudged bankrupt, what information must be provided?

Accepted Answer

| Has Applicant, Franchisee, Guarantor, or any partner, shareholder, member, officer, or director of any of |
|-----------------------------------------------------------------------------------------------------------|
| them ever been adjudged bankrupt? |
| ☐ yes |
| ☐ no |
| |
| |
| If yes, state name of court, case number, and date when adjudication was made: |
| Click here to enter text. |
| |
| |
| |
| |
| |

Source: Item 21 — Financial Statements (FDD pages 84–85)

Question 53

For a Caption By Hyatt franchise, which owners of a Controlling Ownership Interest are required to sign the Guaranty and Assumption of Obligations?

Accepted Answer

To simplify the language in this disclosure document, "we," "us" or "our" means Hyatt Franchising, L.L.C., the franchisor. "You" means the entity acquiring a franchise. One or more of the owners of a Controlling Ownership Interest (defined in Item 15) in you who we specify must sign the Guaranty and Assumption of Obligations, which means that all provisions of the Franchise Agreement (Exhibit C) also will apply to those owners. We expect that only entities, and not individuals, will acquire our franchises.

Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 9–14)

Question 54

Are the franchisee acknowledgements in section 19.2 applicable if the Caption By Hyatt agreement is subject to state franchise laws in California?

Accepted Answer

- 19.2 **Franchisee Acknowledgements in Certain States**.

The following representations, warranties and acknowledgements shall be made by and binding on Franchisee, unless this Agreement and/or the relationship between Hyatt and Franchisee is subject to state franchise registration and/or disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington or Wisconsin.

Source: Item 22 — Contracts (FDD page 85)

Question 55

Is a Caption By Hyatt franchisee allowed to use Guest Information in conducting marketing, advertising and promotional programs for the Hotel, and if so, under what conditions?

Accepted Answer

Franchisee may not use Guest Information in conducting marketing, advertising and promotional programs for the Hotel unless conducted by or through Hyatt or with Hyatt's supervision in each instance. Franchisee shall pay Hyatt the reasonable fees that Hyatt periodically establishes for optional marketing, advertising and promotional materials and programs that Franchisee chooses to acquire from Hyatt or its Affiliates or in which Franchisee chooses to participate.

Franchisee may use the Guest Information, and certain other information and data relating to guests and customers of other Brand Hotels and/or other Hyatt Network Hotels that Hyatt periodically specifies, during the Term only to provide services to guests and potential guests of the Hotel in accordance with the System Standards and all applicable laws, rules and regulations. Franchisee must ensure that its Affiliates may not access, and neither Franchisee nor any of its Affiliates may use, any such Guest Information or such other information and data in any other business or capacity. However, following the expiration or termination of this Agreement, Franchisee may use, and allow its Affiliates and others to use, any Guest Information that was generated at the Hotel (and not supplied to the Hotel by Hyatt or its Affiliate) during the guest's stay at the Hotel and stored in the Hotel's property management system database in any manner that Franchisee deems appropriate (subject to applicable law) at Franchisee's own risk, provided that Franchisee complies, and ensures that any recipients of that Guest Information from Franchisee (whether directly or indirectly) comply, with Hyatt's then current policies and procedures regarding the collection, storage, use, processing and transfer of personal and/or financial data.

11.6 **Guest Information**. All Guest Information is Hyatt's property and part of Confidential Information. Hyatt has the right from time to time during the Term, without notice to Franchisee, to access the Hotel's property management system and other computer systems to retrieve Guest Information. Hyatt and its Affiliates may use, and allow others to use, the Guest Information in any manner that Hyatt deems appropriate (subject to applicable law).

Source: Item 22 — Contracts (FDD page 85)

Question 56

Is a Caption By Hyatt franchisee allowed to use the Proprietary Marks in the spa?

Accepted Answer

Franchisee (and, if applicable, any restaurant operators at the Hotel) may use the Proprietary Marks in connection with any Hotel restaurant operations only with Hyatt's prior written consent and in compliance with all System Standards relating thereto.

If Hyatt discovers Franchisee's unauthorized use of the Proprietary Marks, in addition to Hyatt's other rights and remedies under this Agreement and applicable law, Hyatt may require Franchisee to destroy (with no reimbursement from Hyatt) all offending items reflecting such unauthorized use.

Source: Item 22 — Contracts (FDD page 85)

Question 57

Will a franchisee always receive an Area of Protection or AOP Term when signing a Caption By Hyatt Franchise Agreement?

Accepted Answer

quired hotels, whether operating within or outside the Area of Protection, are not converted to Brand Hotels.

If the Hotel is an operating Brand Hotel, you may not receive any Area of Protection or AOP Term when signing the Franchise Agreement. We will make the determination of whether to provide any Area of Protection based on the time during which the Hotel has operated under the "Caption by Hyatt®" name and the market conditions under which the Hotel operates.

Your rights in the Area of Protection apply only during the AOP Term. Following the AOP Term, you will have no territorial rights or protection, whether within or outside the Area of Protection, and we and our affiliates may open and operate, and authorize any other parties to open and operate, other Brand Hotels the physical premises of which are located within the Area of Protection, including under franchise applications submitted and/or franchise agreements and other agreements signed during the AOP Term. Because we and others may establish and operate one or more Brand Hotels and other Hyatt Network Hotels within the Area of Protection after the AOP Term expires, and during the AOP Term under the exception above, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets we own, or from other channels of distribution or competitive brands that we control.

Except for the limited exclusivity described above, your rights under the Franchise Agreement are nonexclusive in all respects, the Hotel has no territorial protection whatsoever, and we and our affiliates have the right without restriction to engage in all activities we and they desire (including concerning all types of lodging facilities) at any time and place, whether or not using the Proprietary Marks or any aspect of the Hotel System, and whether or not those activities compete with your Hotel.

Source: Item 12 — Territory (FDD pages 65–67)

Question 58

When does a Caption By Hyatt franchisee incur a royalty fee upon termination, and how is it calculated?

Accepted Answer

pending on when the Franchise Agreement terminates. Upon termination of the Franchise Agreement before the term expires for any reason (subject to Article X of the Franchise Agreement), you must pay us, within 15 days after the date of that termination, liquidated damages in a lump sum equal to (a) the lesser of 36 or the number of months then remaining in the Franchise Agreement term had it not been terminated, multiplied by (b) the sum of (i) the Average Monthly Revenue times 5% for lost future Royalty Fees, plus (ii) the Average Monthly Revenue times 3.5% for lost future System Services Charges. "Average Monthly Revenue" means: (i) if, as of the effective date of termination, at least 36 months have elapsed since the Hotel's opening date, the average monthly Gross Rooms Revenue of the Hotel during the 12 full calendar months preceding the month of termination; or (ii) if, as of the effective date of termination, the Hotel's opening date has not yet occurred, the average monthly Gross Rooms Revenue per available guest room for all Brand Hotels in the United States (including those that we and our affiliates own, manage, and franchise) during the 12 full calendar months preceding the month of termination, multiplied by the number of guest rooms approved for the Hotel; or (iii) if, as of the effective date of termination, the Hotel's opening date has occurred but

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less than 36 months have elapsed since the Hotel's opening date, either (a) the amount determined under part (ii) above or (b) the average monthly Gross Rooms Revenue of the Hotel during the period from the Hotel's opening date until the effective date of termination, whichever of (a) or (b) is greater.

However, if "Average Monthly Revenues" as determined under any part of (i) through (iii) above was materially and negatively impacted during the preceding 12 full calendar month period by a disruption in Hotel operations resulting from force majeure, casualty, suspension of operations (whether or not we consented to it), renovation of the Hotel, or any other similar circumstances, then we will determine "Average Monthly Revenue" by referencing the most recent 12 full calendar month period before termination, during which the Hotel performance was not impacted.

If we or you terminate the Franchise Agreement because of a Consequential Termination, then the liquidated damages are 150% of the amount calculated above. A "Consequential Termination" occurs if (1) the Franchise Agreement's termination involves a transfer of the Hotel or its assets, or a direct or indirect Controlling Ownership Interest in you, to a Competitor (defined below); or (2) there are 3 or more franchise agreements for Hyatt-Related Select Service Brand (defined below) hotels with you or your affiliates (including the Franchise Agreement) that we (or our affiliate) terminate because of your (or your affiliate's) default or you (or your affiliates) terminate in breach of the applicable agreement. A "Hyatt-Related Select Service Brand" means any brand under which or in affiliation with which a select service Hyatt Network Hotel operates. A "Competitor" is any entity that owns, franchises and/or manages, or is an affiliate of any entity that owns, franchises and/or manages, a select service hotel brand, trade name or service mark for a system of at least 4 hotels with an average daily room rate for all or substantially all of the hotels in the U.S. during the then most recent full calendar year that is at least 60% of the average daily room rate for Brand Hotels operating in the U.S.

If a governmental agency or other authority condemns or takes by eminent domain or expropriation all or a substantial portion of the Hotel, and we and you do not agree to terms for relocating the Hotel, then either we or you may terminate the Franchise Agreement.

Source: Item 6 — Other Fees (FDD pages 20–36)

Question 59

Is a Caption By Hyatt franchisee obligated to pay additional fees if Hyatt determines they need extra pre-opening guidance due to a lack of prior experience?

Accepted Answer

dditional Pre-Opening Advisory Services

You may request, or we may determine that you need, additional guidance, services or assistance during the pre-opening period concerning the development, construction, or inspection and approval process that is beyond what we typically provide to similarly situated Brand Hotels. We may determine you need additional pre-opening services under certain circumstances, including if the Hotel is a conversion of an existing structure to a Brand Hotel (rather than a newlyconstructed facility), if one of our affiliates previously managed the Hotel, or if you (or your owners or operators) lack prior experience or familiarity with the System. If we agree to provide this additional guidance and advice (for example, making more than a reasonable number of visits to the Hotel during the development and construction period), then you must pay our then current fees for our services. The costs of these fees will vary depending on the additional guidance or service you request or we determine you need, but we estimate that you may pay between \$0 and \$250,000 for additional serv

Source: Item 5 — Initial Fees (FDD pages 16–20)

Question 60

When must a Caption By Hyatt franchisee open a Pre-Opening Sales Office at the Site?

Accepted Answer

Promptly after the Technology System is installed at the Hotel, at Hyatt's option, Franchisee must open and begin operating a Pre-Opening Sales Office at the Site, staffed by the Hotel's director of sales.

"**Pre-Opening Sales Office**" means a temporary or permanent sales office at the Site to solicit and accept reservations before the Opening Date for stays after the Opening Date.

Source: Item 22 — Contracts (FDD page 85)

Question 61

Must a Caption By Hyatt franchisee open a Pre-Opening Sales Office after the Technology System is installed at the Hotel?

Accepted Answer

Promptly after the Technology System is installed at the Hotel, at Hyatt's option, Franchisee must open and begin operating a Pre-Opening Sales Office at the Site, staffed by the Hotel's director of sales.

"**Pre-Opening Sales Office**" means a temporary or permanent sales office at the Site to solicit and accept reservations before the Opening Date for stays after the Opening Date.

Source: Item 22 — Contracts (FDD page 85)

Question 62

Is a Caption By Hyatt franchisee required to participate in cooperative advertising programs?

Accepted Answer

Hyatt will not require Franchisee to participate in a Cooperative.

However, if Franchisee chooses to participate in the Cooperative, Franchisee must do so according to the Cooperative's

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rules, including paying the Hotel's allocable share of any advertising, marketing, promotional and other programs that the Cooperative conducts. All restrictions under this Agreement relating to any advertising, marketing or promotional programs that Franchisee conducts also apply to any such programs that the Cooperative conducts.

Source: Item 22 — Contracts (FDD page 85)

Question 63

Is the franchisee required to provide free lodging for Caption By Hyatt representatives if training is held at the hotel?

Accepted Answer

If Hyatt holds any training at the Hotel, Franchisee must provide free lodging for Hyatt's representatives, subject to availability.

Source: Item 22 — Contracts (FDD page 85)

Question 64

Is a Caption By Hyatt franchisee required to work with a third-party agency to receive agency oversight services under the Field Marketing Program?

Accepted Answer

- **Agency Oversight** Manager to join up to Choose an item. to provide strategic recommendations for paid media, outside of Top-Up, to include paid search, display and social media, including budget recommendations and performance review (only applicable if Property is working with a third party outside agency).

Source: Item 23 — Receipts (FDD pages 85–349)

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