factual

Where is the 'Area of Protection' defined within the Caption By Hyatt franchise agreement?

Caption_By_Hyatt Franchise · 2025 FDD

Answer from 2025 FDD Document

and obligation to use the Hotel System during the Term (defined below in Section 1.2) to build or convert, and operate, the Hotel at the Site in affiliation with the Proprietary Marks in accordance with this Agreement's terms.

  • 1.2 Term. The term of this Agreement (the "Term") will commence on the Effective Date and expire without notice on the date which is twenty (20) years after the first (1st) day of the Opening Month, subject to its earlier termination as set forth in this Agreement.
  • 1.3 Rights in Area of Protection During AOP Term. Subject to the one exception below, neither Hyatt nor any of its Affiliates will open and operate during the AOP Term, nor authorize any other party to open and operate during the AOP Term, any other Brand Hotels the physical premises of which are located within the Area of Protection. The one exception to this restriction is that, during the AOP Term, if Hyatt or any Affiliate acquires ownership of or the right to operate, manage, franchise or license (regardless of the form of transaction) another group of at least four (4) hotels, one (1) or more of which hotels are located or are under contract or construction to be located in the Area of Protection, then Hyatt and/or its Affiliates will have the unrestricted right to convert, or cause to be converted, the acquired hotel(s) within the Area of Protection from its (or their) original trade identity to operate in affiliation with the Proprietary Marks and the Hotel System, and thereafter to operate or authorize any other party to operate such hotel(s) as Brand Hotels, even if one (1) or more of the other acquired hotels, whether operating within or outside the Area of Protection, are not converted to Brand Hotels.

Franchisee's rights in the Area of Protection apply only during the AOP Term. Following the AOP Term, Franchisee will have no territorial rights or protection whatsoever, whether within or outside the Area of Protection, and Hyatt and its 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 pursuant to franchise applications submitted and/or franchise agreements and other agreements signed during the AOP Term.

  • 1.4 No Other Restrictions. Except for the limited exclusivity provided in Section 1.3, Franchisee's rights under this Agreement are nonexclusive in all respects, the Hotel has no territorial protection whatsoever, and Hyatt and its Affiliates have the right without restriction to engage in any and all activities Hyatt and they desire (including with respect to any and 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 the Hotel. Without limiting the foregoing, Franchisee acknowledges that Hyatt and its Affiliates currently operate other franchised and non-franchised systems for lodging facilities and other accommodations and hospitality affiliations that use different brand names, trademarks, and service marks, including those with the "Hyatt" name as part of their brand name, some of which might operate and have facilities in the Area of Protection during the AOP Term, that will compete directly with Franchisee. Hyatt and its Affiliates may use or benefit from, among other things, common computer systems, administrative systems, reservation systems, purchasing systems and personnel, and may provide some or all System Services to other Hyatt Network Hotels and other hotels, lodging facilities and other businesses, even if they compete with the Hotel.

Source: Item 22 — Contracts (FDD page 85)

What This Means (2025 FDD)

According to Caption By Hyatt's 2025 Franchise Disclosure Document, the 'Area of Protection' is defined within Article I of the franchise agreement, specifically in section 1.3, titled 'Rights in Area of Protection During AOP Term.' This section outlines the terms under which Caption By Hyatt or its affiliates will not open or authorize other parties to open other Brand Hotels within the franchisee's Area of Protection during the AOP Term. The AOP Term dictates the length of time the area of protection is in effect.

However, there is an exception to this exclusivity. During the AOP Term, if Caption By Hyatt or any affiliate acquires a group of at least four hotels, and one or more are located (or under contract/construction to be located) within the Area of Protection, Caption By Hyatt has the right to convert those acquired hotels to operate under the Proprietary Marks and Hotel System. This conversion can occur even if the other acquired hotels (within or outside the Area of Protection) are not converted to Caption By Hyatt hotels.

Following the AOP Term, the franchisee loses all territorial rights, and Caption By Hyatt and its affiliates can operate or authorize others to operate other Brand Hotels within the former Area of Protection. Furthermore, aside from the limited exclusivity in Section 1.3, the franchisee's rights are nonexclusive, and Caption By Hyatt retains the right to engage in any activities, including those that compete with the franchisee's hotel, at any time and place.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.