In the context of the Caption By Hyatt guarantee, who is considered the 'Guarantor'?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Guarantor" means each individual or entity who from time to time guarantees Franchisee's obligations under this Agreement.
"Guarantor Monetary Threshold" means each of the following: (a) total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), each as calculated in accordance with U.S. generally accepted accounting principles, in the minimum amount of the Guarantor Net Worth Minimum set forth in Exhibit B-1 and (b) liquid assets (consisting of cash, cash equivalents and marketable securities) in the minimum amount of the Guarantor Liquidity Minimum set forth in Exhibit B-1.
Franchisee must ensure that one or more of the Controlling Owners which Hyatt specifies as of the Effective Date signs Hyatt's Guaranty and Assumption of Obligations (the "Guaranty"), the current form of which is attached as Exhibit H.
Franchisee represents and warrants that at least one Guarantor satisfies the Guarantor Monetary Threshold as of the Effective Date, and Franchisee agrees to ensure that at least one Guarantor continues to satisfy the Guarantor Monetary Threshold (as it may be increased in accordance with Exhibit B-1) at all times during the Term.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, a Guarantor is defined as each individual or entity who guarantees the franchisee's obligations under the Franchise Agreement. This means that the Guarantor is responsible for ensuring that the franchisee meets all of its financial and operational commitments to Caption By Hyatt.
The FDD also specifies that the franchisee must ensure that one or more of the Controlling Owners, as designated by Caption By Hyatt, signs the Guaranty and Assumption of Obligations. Furthermore, the franchisee must represent and warrant that at least one Guarantor satisfies the Guarantor Monetary Threshold as of the Effective Date, and must ensure that at least one Guarantor continues to meet this threshold throughout the term of the agreement. The Guarantor Monetary Threshold includes meeting minimum requirements for total assets less total liabilities and liquid assets.
In essence, the Guarantor acts as a financial backstop for the franchisee, providing Caption By Hyatt with assurance that the franchisee's obligations will be fulfilled. This is a common practice in franchising, particularly when the franchisee is a newly formed entity or lacks a substantial operating history. Prospective Caption By Hyatt franchisees should carefully consider the implications of the Guaranty and ensure that they have a qualified Guarantor in place to meet Caption By Hyatt's requirements.