What is the duration of the term for a Caption By Hyatt franchise agreement?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
13.1 Right to a Successor Franchise Agreement. When this Agreement expires, if Franchisee (and, as applicable, each Guarantor): (a) has substantially complied with this Agreement during its Term and is in full compliance with this Agreement (including all System Standards) as of the date upon which this Agreement expires; (b) then meets Hyatt's then applicable standards for franchisees and owners of franchisees of Brand Hotels; (c) has received passing Quality Assurance Scores (as defined in the System Standards) on all evaluations conducted during the preceding three (3)-year period; and (d) has the right to maintain possession of the Hotel for at least ten (10) years following this Agreement's expiration, then Hyatt will offer Franchisee the right to enter into a successor franchise agreement to continue operating the Hotel
as a Brand Hotel for a term commencing immediately upon the expiration of this Agreement and expiring ten (10) years from that date (the "Successor Franchise Right") in accordance with this ARTICLE XIII. If Franchisee (or any Guarantor) does not meet the requirements of this Section 13.1, then Hyatt need not enter into a successor franchise agreement with Franchisee, whether or not Hyatt notified Franchisee of the non-compliance or had, or chose to exercise, the right to terminate this Agreement during its Term.
- 13.2 Successor Franchise Notice and PIP.
Franchisee agrees to give Hyatt written notice of Franchisee's election to exercise or not to exercise the Successor Franchise Right no more than twenty-one (21) months, and no less than eighteen (18) months, before this Agreement expires.
Simultaneously with submitting its notice to exercise the Successor Franchise Right, Franchisee shall pay Hyatt its then current PIP fee, which is non-refundable.
Franchisee's failure to deliver such notice within such timeframe or to pay such PIP fee shall be deemed Franchisee's decision not to exercise the Successor Franchise Right.
- 13.3 Agreements/Releases.
If Franchisee satisfies all of the other conditions for a successor franchise agreement under this ARTICLE XIII, Franchisee agrees to sign the form of franchise agreement and any ancillary agreements Hyatt then customarily uses in granting franchises for Brand Hotels (modified as necessary to reflect the fact that it is for a successor franchise and that there will be no further renewal or successor franchise rights), which may contain provisions that differ materially from any and all of those contained in this Agreement, except that Hyatt will not charge a successor franchise fee.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, the franchise agreement's term starts on the effective date and ends, without notice, twenty years after the first day of the opening month. However, the agreement may be terminated earlier under certain conditions outlined in the agreement.
Upon expiration of the initial term, a Caption By Hyatt franchisee may have the option to enter into a successor franchise agreement for an additional ten years. To qualify, the franchisee must have substantially complied with the original agreement, meet Hyatt's standards for franchisees, have passing Quality Assurance Scores from the last three years, and have the right to maintain possession of the hotel for at least ten years following the original agreement's expiration.
To exercise the Successor Franchise Right, the franchisee must provide written notice to Caption By Hyatt between 18 and 21 months before the agreement expires and pay the then-current PIP (Property Improvement Plan) fee, which is non-refundable. Failure to meet these deadlines is considered a decision not to pursue a successor franchise. If all conditions are met, the franchisee must sign Hyatt's current franchise agreement and releases, though the new agreement may differ materially from the original.