In the Caption By Hyatt franchise agreement, what is the effect of Hyatt's decision-making on its own financial interests?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
18.1 The Exercise of Hyatt's Judgment. Hyatt has the right from time to time to develop, operate, and change the Hotel System and System Standards in any manner not specifically prohibited by this Agreement. Whenever Hyatt has reserved in this Agreement a right to take or to withhold an action, or to grant or decline to grant Franchisee the right to take or omit an action, Hyatt may, except as otherwise specifically provided in this Agreement, make its decision or exercise its rights based on information readily available to it and its judgment of what is in the best interests of Hyatt and its Affiliates, the Brand Hotel network generally, or the Hotel System at the time its decision is made, without regard to whether Hyatt could have made other reasonable or even arguably preferable alternative decisions or whether its decision promotes Hyatt's (or its Affiliates') financial or other individual interest. Except where this Agreement expressly obligates Hyatt reasonably to approve or not unreasonably to withhold its approval of any of Franchisee's actions or requests, Hyatt has the absolute right to refuse any request Franchisee makes or to withhold its approval of any of Franchisee's proposed, initiated, or
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, Hyatt retains significant decision-making authority regarding the Hotel System and System Standards. Hyatt may make decisions based on its judgment of what is in the best interests of Hyatt, its affiliates, the Brand Hotel network, or the Hotel System. This includes the right to take or withhold actions and grant or decline rights to the franchisee, except as otherwise specifically provided in the agreement. Hyatt's decisions can be made without regard to whether other reasonable alternatives exist or whether the decision primarily benefits Hyatt's financial interests.
This latitude in decision-making means that Caption By Hyatt is not obligated to prioritize the franchisee's financial interests when making operational or strategic choices for the brand. While the agreement may specify instances where Hyatt must act reasonably in approving or disapproving a franchisee's actions, Hyatt generally has the right to refuse any request or withhold approval for actions requiring its consent, unless the franchisee is in default of the agreement. This could potentially lead to situations where Hyatt's decisions, while benefiting the overall brand or Hyatt's financial position, may not be the most advantageous for individual franchisees.
Prospective Caption By Hyatt franchisees should be aware that Hyatt's decisions regarding the Hotel System and System Standards are subject to change and are not part of the franchise agreement. Franchisees should carefully consider the potential implications of Hyatt's broad decision-making authority and how it could affect their hotel's operations and profitability. It is important to engage in thorough due diligence and seek clarification from Hyatt regarding the specific circumstances under which Hyatt's decisions might impact individual franchisees.