What does the Guarantor Monetary Threshold for a Caption By Hyatt franchise entail?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, each owner that signs the Guaranty must agree, and you must ensure, that at least one guarantor will satisfy the Guarantor Monetary Threshold at all times during the Franchise Agreement's term. The "Guarantor Monetary Threshold" means each of the following: (a) total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), each as calculated according to U.S. generally accepted accounting principles, in the minimum amount of the guarantor net worth minimum listed in Exhibit B-1 to the Franchise Agreement; and (b) liquid assets (consisting of cash, cash equivalents and marketable securities) in the minimum amount of the guarantor liquidity minimum listed in Exhibit B-1 to the Franchise Agreement. We will determine the amount of the Guarantor Monetary Threshold as of the Franchise Agreement's effective date based on information we deem relevant, including the Hotel's size, the market in which the Hotel will operate, and our assessment of our risk or exposure in the transaction. We will list the initial Guarantor Monetary Threshold in Exhibit B-1 to the Franchise Agreement before we and you sign it. The Guarantor Monetary Threshold will increase automatically each year of the Franchise Agreement's term, without notice from us, effective on the first day of the
calendar month during which the Franchise Agreement's effective date falls, by an amount equal to the CPI Increase. The "CPI Increase" means the amount to be adjusted multiplied by a fraction, the numerator of which is the Consumer Price Index for All Urban Consumers for All Items, which the U.S. Department of Labor, Bureau of Labor Statistics publishes (the "Base Index") as of the first day of the calendar month during which the increase is to take effect, and the denominator of which is the Base Index in effect on the Franchise Agreement's effective date or used for the most recent increase (whichever is later). If the Base Index is no longer published, we may designate another reasonably comparable index for calculating changes in the cost of living or purchasing power for consumers. Your guarantors must provide us on an annual basis financial statements or other documents that we reasonably specify, which you or the guarantor certify in the manner we specify, demonstrating that at least one guarantor satisfies the Guarantor Monetary Threshold. You and your guarantors must reasonably cooperate with all auditing and reporting requirements relating to the Guarantor Monetary Threshold.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 71–74)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the Guarantor Monetary Threshold is a financial requirement that at least one guarantor must meet throughout the term of the Franchise Agreement. This threshold is defined by two components: a minimum net worth and a minimum amount of liquid assets. The net worth is calculated as total assets less total liabilities, excluding any assets and liabilities related solely to the hotel. The liquid assets include cash, cash equivalents, and marketable securities.
The specific amounts for both the net worth and liquid asset minimums are detailed in Exhibit B-1 of the Franchise Agreement. These amounts are determined by Caption By Hyatt based on factors such as the hotel's size, the market in which it operates, and the franchisor's assessment of risk. The initial Guarantor Monetary Threshold will be listed in Exhibit B-1 before the Franchise Agreement is signed by both parties.
The Guarantor Monetary Threshold is not static; it increases annually, effective on the first day of the calendar month during which the Franchise Agreement's effective date falls. This increase is tied to the CPI Increase, which is calculated using the Consumer Price Index for All Urban Consumers for All Items published by the U.S. Department of Labor, Bureau of Labor Statistics. Franchisees must ensure their guarantors provide annual financial statements or other specified documents, certified as required by Caption By Hyatt, to demonstrate ongoing compliance with the Guarantor Monetary Threshold. Franchisees and their guarantors must also cooperate with any auditing and reporting requirements related to this threshold.