What is the 'CPI Increase' as it relates to the Caption By Hyatt franchise agreement?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
We will list the initial Guarantor Monetary Threshold in Exhibit B-1 to the Franchise Agreement before we and you sign it. The Guarantor Monetary Threshold will increase automatically each year of the Franchise Agreement's term, without notice from us, effective on the first day of the
calendar month during which the Franchise Agreement's effective date falls, by an amount equal to the CPI Increase. The "CPI Increase" means the amount to be adjusted multiplied by a fraction, the numerator of which is the Consumer Price Index for All Urban Consumers for All Items, which the U.S. Department of Labor, Bureau of Labor Statistics publishes (the "Base Index") as of the first day of the calendar month during which the increase is to take effect, and the denominator of which is the Base Index in effect on the Franchise Agreement's effective date or used for the most recent increase (whichever is later).
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 71–74)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the 'CPI Increase' is used to adjust the Guarantor Monetary Threshold each year of the Franchise Agreement's term. This adjustment takes effect automatically on the first day of the calendar month during which the Franchise Agreement's effective date falls.
The CPI Increase is calculated by multiplying the amount to be adjusted by a fraction. The numerator of this fraction is the Consumer Price Index for All Urban Consumers for All Items (the "Base Index") published by the U.S. Department of Labor, Bureau of Labor Statistics, as of the first day of the calendar month during which the increase is to take effect. The denominator is the Base Index in effect on the Franchise Agreement's effective date or used for the most recent increase, whichever is later.
For a prospective Caption By Hyatt franchisee, this means the financial requirements for the guarantor of the franchise agreement will increase annually based on changes in the Consumer Price Index. If the Base Index is no longer published, Caption By Hyatt may designate another reasonably comparable index for calculating changes in the cost of living or purchasing power for consumers. This ensures that the financial strength required of the guarantor keeps pace with inflation and maintains an adequate level of security for Caption By Hyatt.