Does the Caption By Hyatt Franchise Agreement address Comfort Letter Parties?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
ct as a waiver of Franchisee's non-compliance, or of Hyatt's right to demand full compliance, with such pre-opening requirements or any other provision of this Agreement. Hyatt will have no liability to Franchisee for the Hotel's construction or renovation. It is Franchisee's responsibility to ensure that the Hotel (a) complies with Hyatt's requirements as communicated to Franchisee by Hyatt, (b) complies with all Accessibility Laws and other applicable ordinances, building codes, and permit requirements, and (c) is safe for occupancy.
- 2.7 Comfort Letter Parties. Franchisee must cause each Comfort Letter Party to sign a comfort letter or other agreement that Hyatt reasonably specifies under which such Comfort Letter Party agrees, among other things, to assume Franchisee's obligations under this Agreement (subject to Hyatt's rights under ARTICLE XII) if the Comfort Letter Party or any of its Affiliates acquires title or otherwise assumes possession, or the right to sell or direct the disposition of, the Hotel's real property or building and improvements. Franchisee shall pay Hyatt its then current comfort letter fee for each comfort letter that Hyatt negotiates relating to the Hotel. In addition, upon Hyatt's request from time to time, Franchisee must cause each Comfort Letter Party to sign and deliver to Hyatt an estoppel in the form that Hyatt reasonably specifies concerning the status of Franchisee's contractual relationship with that Comfort Letter Party.
- 2.8 Hotel System Variations. Franchisee acknowledges that Hyatt and its Affiliates may operate, and authorize others to operate, Brand Hotels within or outside the United States providing additional, fewer and/or different amenities and services to guests than the Hotel provides or that otherwise operate in a manner that is substantially different from the manner in which the Hotel operates. Hyatt may establish and periodically modify the Hotel System and System Standards for certain Brand Hotels in a manner that is different from the Hotel System and System Standards that apply to some or all Brand Hotels.
ARTICLE III
TRAINING, GUIDANCE AND ASSISTANCE
3.1 Training.
(a) Owner and Management Company Orientation.
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 does address Comfort Letter Parties. Specifically, the franchisee is required to ensure that each Comfort Letter Party signs a comfort letter or other agreement that Hyatt reasonably specifies. This agreement stipulates that the Comfort Letter Party will assume the franchisee's obligations under the Franchise Agreement if they acquire title or possession of the hotel's real property.
The franchisee is also responsible for paying Hyatt's current comfort letter fee for each comfort letter negotiated for the hotel. Additionally, upon Hyatt's request, the franchisee must ensure that each Comfort Letter Party signs and delivers an estoppel in a form that Hyatt reasonably specifies, concerning the status of the contractual relationship between the franchisee and the Comfort Letter Party.
Furthermore, the document states that Franchisee may mortgage or otherwise grant a Security Interest in the Hotel and its assets (but not this Agreement) to a Lender, and Franchisee's Owners may pledge their ownership interests in Franchisee or any Controlling Owner to a Lender, without having to obtain Hyatt's prior approval and without complying with the other terms and conditions of Section 12.4, provided the Lender signs Hyatt's form of comfort letter pursuant to Section 2.7. Unless otherwise specified in any then effective comfort letter, the terms and conditions of this Agreement (including Section 12.3 or 12.4) apply to any foreclosure or other exercise of any rights or remedies with respect to any Security Interest. Exhibit J also lists a Comfort Letter as one of the exhibits to the Franchise Agreement.