What is the franchisee's obligation regarding insurance under the Caption By Hyatt franchise agreement's indemnification clause?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
rectly arising out of the Hotel's operation or the business Franchisee conducts under this Agreement.
8.2 Franchisee's Notices to Public Concerning Independent Status. Franchisee must provide notices making clear to the public that Hyatt is not the Hotel's owner or operator and is not accountable for events occurring at the Hotel. Franchisee also agrees to communicate clearly with Hotel employees in employment agreements, handbooks and other materials that Franchisee (or the Management Company, as applicable), and not Hyatt or its Affiliates, is the employer of all Hotel employees.
8.3 Franchisee's Indemnification and Defense of Hyatt.
- (a) Indemnification. In addition to Franchisee's obligation under this Agreement to procure and maintain insurance, Franchisee agrees to indemnify and hold harmless the Hyatt Indemnified Parties against, and to reimburse any one or more of the Hyatt Indemnified Parties for, all Losses directly or indirectly arising out of, resulting from, or in connection with (i) the application Franchisee submitted to Hyatt for the rights granted under this Agreement; (ii) the development or operation of the Hotel, including the use of any Market Descriptor or Hotel IP in connection with the Hotel and any claim or allegation relating to the Accessibility Laws, and including claims alleging either intentional or negligent conduct, acts or omissions by Hyatt or its Affiliates (or any of their agents, employees or representatives) relating to the operation of the Hotel, the F&B Operations, the Spa Operations (if any) or the Hotel System, subject to Section 8.4(a); or (iii) Franchisee's breach of this Agreement.
- (b) Defense.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, in addition to the general obligation to procure and maintain insurance, the franchisee has specific responsibilities related to indemnification. The franchisee must indemnify and hold harmless Hyatt Indemnified Parties and reimburse them for all losses that directly or indirectly arise from several areas. These include the application the franchisee submitted, the development or operation of the hotel (including any claims related to accessibility laws or allegations of intentional or negligent conduct by Hyatt), and the franchisee's breach of the franchise agreement. This means the franchisee's insurance coverage must be adequate to cover these potential liabilities.
The franchisee is also obligated to defend Hyatt Indemnified Parties against any proceedings arising from the same matters covered by the indemnification clause. This defense is at the franchisee's expense, even if the proceedings allege negligence or willful misconduct by a Hyatt Indemnified Party. The franchisee must notify Hyatt within five days of receiving notice of any such proceeding and provide copies of all related correspondence and court papers.
In practical terms, this means a Caption By Hyatt franchisee needs to ensure their insurance policies are comprehensive and specifically cover the risks associated with operating a hotel, including potential legal claims. They should also consult with an insurance professional to determine appropriate coverage levels and ensure compliance with Hyatt's System Standards. Failure to maintain adequate insurance could leave the franchisee financially responsible for significant losses and legal expenses.