What are 'gross fees' for a Caption By Hyatt franchise, and what do they include?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- Gross fees—Gross fees include base management fees, incentive management fees, and franchise and other fees.
Base management fees are generally calculated as a percentage of gross revenues, and incentive management fees are generally computed based on a hotel profitability measure.
Included in the management fees are fees that we earn in exchange for providing the hotel access to Hyatt's intellectual property ("IP").
Franchise and other fees consist of (i) an initial franchise fee and ongoing royalty fees computed as a percentage of gross room revenues and as applicable, food and beverage revenues, (ii) termination fees, (iii) license fees associated with the licensing of the Hyatt brand names through our co-branded credit card programs and with sales of our branded residential units, (iv) management and royalty fees related to the management and licensing of certain of our brands to the Unlimited Vacation Club following the UVC Transaction, and (v) fees from hotel services provided to certain all-inclusive resorts.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, gross fees encompass several revenue streams for the company. These include base management fees, incentive management fees, and franchise and other fees. Base management fees are typically calculated as a percentage of the gross revenues generated by the hotel. Incentive management fees, on the other hand, are usually based on a measure of the hotel's profitability. These fees compensate Caption By Hyatt for providing the hotel access to its intellectual property.
Franchise and other fees consist of several components. These include the initial franchise fee and ongoing royalty fees, which are calculated as a percentage of gross room revenues and, where applicable, food and beverage revenues. Additionally, these fees cover termination fees and license fees associated with the use of the Hyatt brand names through co-branded credit card programs and sales of branded residential units. They also include management and royalty fees related to the management and licensing of certain brands to the Unlimited Vacation Club, as well as fees from hotel services provided to certain all-inclusive resorts.
For a prospective Caption By Hyatt franchisee, understanding the composition of gross fees is crucial as it directly impacts the costs and revenue sharing structure. The franchisee needs to be aware of how base and incentive management fees are calculated, as well as the various components included in franchise and other fees. This knowledge is essential for accurate financial planning and assessing the profitability of the franchise. Franchisees should also inquire about the specific percentages and calculation methods used for these fees to fully understand their financial obligations and potential earnings.