What costs are included in the 'System Services Costs' for a Caption By Hyatt franchise?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
"System Services Costs" means, for the System Services in which the Hotel participates (or is required to participate), all costs that the Hyatt Group actually incurs or properly accrues during the period of determination in providing those System Services, including out-of-pocket expenses, costs for employees, occupancy costs, capital costs, administrative expenses, carrying costs and other costs. Any allocation of shared costs that the Hyatt Group makes in good faith and with the intention of fairly allocating those costs to System Services is binding on us and you. The Hyatt Group may vary these allocations depending on, among other things, the specific brand, size or market positioning of the Hotel. System Services Costs include the actual costs that the Hyatt Group incurs and are not subject to any mark-up, premium or profit on any Mandatory Services, but may include a profit or mark-up component on Non-Mandatory Services.
Source: Item 6 — Other Fees (FDD pages 20–36)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, System Services Costs encompass all expenses the Hyatt Group incurs while providing System Services to participating hotels. These costs include out-of-pocket expenses, employee costs, occupancy costs, capital costs, administrative expenses, carrying costs, and other costs. The Hyatt Group allocates shared costs in good faith, intending to fairly distribute these costs among the System Services. These allocations can vary based on factors such as the brand, size, or market positioning of the hotel.
System Services are categorized as either Mandatory or Non-Mandatory. Mandatory Services are those that the Hyatt Group requires franchisees to participate in, while Non-Mandatory Services are optional. System Services Costs include the actual costs incurred by the Hyatt Group, without any markup, premium, or profit on Mandatory Services. However, Non-Mandatory Services may include a profit or markup component.
For a prospective Caption By Hyatt franchisee, understanding these costs is crucial for budgeting and financial planning. The franchisee will be responsible for their share of these System Services Costs, which are determined equitably among similarly situated hotels. It's important to note that the Hyatt Group may periodically change its method of allocation and the categories of hotels considered as Participating Hotels, but these changes will be made on a reasonable, equitable, and non-discriminatory basis. Franchisees should also be aware that while the Commercial Services Fee covers various commercial services, additional fees like the Digital Acquisition Fee and GDS reservation fees may apply, impacting the overall cost of operations.