What is a Caption By Hyatt franchisee's obligation regarding participation in the Quality Assurance and Compliance Program?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
nce, Franchisee Compliance, and Guest Satisfaction. The Hotel must participate in quality assurance, compliance and guest satisfaction programs that we periodically develop and modify (collectively, the "Quality Assurance and Compliance Program"). You must pay your allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program. Our representatives may inspect or audit the Hotel at any time, with or without notice to you, to determine whether you and the Hotel are complying with the Hotel System, System Standards, and the terms of the Franchise Agreement, and you will give them free lodging (subject to availability) during the inspection period. If we determine that the Hotel is not complying with the Hotel System, System Standards, or any other Franchise Agreement provisions, then you will pay or bear the cost of the Hotel's allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program to correct the noncompliance. This includes (a) reimbursing our costs related to your non-compliance, such as travel and living expenses, guest satisfaction payments or expenses, and other costs for administering any necessary actions, follow-up inspections, audits or re-evaluation visits until you have fully corrected the non-compliance, (b) paying for meetings and additional brand standards training programs that we specify and require your personnel to attend relating to your non-compliance, and (c) paying program fees which we and/or our affiliates may use to promote guest satisfaction initiatives for Hyatt Network Hotels. These amounts will vary depending on the extent of your non-compliance and may increase if our costs increase. Currently, we impose the following fees for each 6-month FIP stage if the Hotel is placed in or remains in FIP protocols as a result of QA scores below requirements: (i) Stage 1 – $5,000 administrative fee; (ii) Stage 2 – $15,000 administrative fee; and (iii) Stage 3 – $20,000 administrative fee. In addition, if the Hotel does not achieve passing scores necessary to exit the FIP protocols by the end of Stage 3, the Hotel is placed in our BPP program, which requires the Hotel to pay an administrative fee of $45,000 per year. We may, as we deem appropriate, reduce or refund FIP fees based on improved performance and/or your accelerated compliance with hotel renovation requirements. Under the FIP and BPP policies currently in place, Brand Hotels are eligible for up to a 100% reduction of the applicable FIP or BPP fee, based on improvement in performance. We may introduce additional compliance programs in the future. Any fees associated with such programs will fall within the same ranges as the FIP and BPP fees listed above.
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- Liquidated Damages. The amount of liquidated damages you must pay us if the Franchise Agreement terminates varies depending on when the Franchise Agreement terminates.
Source: Item 6 — Other Fees (FDD pages 20–36)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, participation in the Quality Assurance and Compliance Program is mandatory. The franchisee must participate in quality assurance, compliance, and guest satisfaction programs that Caption By Hyatt develops and modifies periodically. The franchisee is also responsible for paying their share of all fees and costs associated with the Quality Assurance and Compliance Program.
Caption By Hyatt representatives have the right to inspect or audit the hotel at any time, with or without prior notice, to ensure compliance with the Hotel System, System Standards, and the terms of the Franchise Agreement. During these inspections, franchisees must provide free lodging to the representatives, subject to availability. If non-compliance is detected, the franchisee is responsible for covering all associated costs to correct the issues, including reimbursement of expenses, payment for additional training programs, and program fees to promote guest satisfaction initiatives.
Failure to comply with quality assurance standards can lead to placement in the Franchise Improvement Program (FIP). The fees for each six-month FIP stage are: Stage 1 - $5,000, Stage 2 - $15,000, and Stage 3 - $20,000. If the hotel does not achieve passing scores by the end of Stage 3, it will be placed in the Brand Performance Program (BPP), which carries an administrative fee of $45,000 per year. Caption By Hyatt may reduce or refund FIP fees based on improved performance and accelerated compliance with hotel renovation requirements.
Caption By Hyatt also offers centralized resources to support local and on-property services for a fee through the Central Hotel Services by Hyatt Program. While these central hotel services are generally non-mandatory, they may become mandatory as part of the requirements of the Quality Assurance and Compliance Program, as a condition of approving the hotel's management company, or as consideration for other negotiated items in the Franchise Agreement.