What does the 'Guarantor Monetary Threshold' mean for a Caption By Hyatt franchise?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
iness interruption insurance applicable to the rental of rooms at the Hotel, then there shall be added to Gross Rooms Revenue an amount equal to the imputed gross revenues that the insurer used to calculate those proceeds. Inclusion of resort fees, destination fees, or similar fees in "Gross Rooms Revenue" does not constitute approval of or authorization by Hyatt to charge such fees.
- "Ground Lessor" means any person or entity (including any Affiliate of Franchisee) that, directly or through one o
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the 'Guarantor Monetary Threshold' refers to the minimum financial requirements that a guarantor must meet to guarantee the franchisee's obligations under the Franchise Agreement. The guarantor ensures that Caption By Hyatt will receive payment and performance of the franchisee's obligations. This threshold is defined by two components: a minimum amount of total assets less total liabilities (excluding hotel-specific assets and liabilities), and a minimum amount of liquid assets (cash, cash equivalents, and marketable securities). The specific minimum amounts for these components are detailed in Exhibit B-1 of the Franchise Agreement.
To ensure compliance with the Guarantor Monetary Threshold, Caption By Hyatt requires the franchisee to ensure that at least one guarantor meets the threshold requirements from the effective date of the agreement and throughout its term. The franchisee must also ensure that the guarantor cooperates with Caption By Hyatt regarding auditing and reporting requirements related to the Guarantor Monetary Threshold. The specific details of these requirements, including the forms and formats for reporting, will be specified by Caption By Hyatt.
The Guarantor Monetary Threshold is subject to annual increases based on the Consumer Price Index (CPI). This means that the minimum required amounts for both total assets less liabilities and liquid assets will increase each year, adjusted according to the CPI Increase formula. The CPI Increase 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. If the Base Index is no longer published, Caption By Hyatt may designate another reasonably comparable index.
If the guarantor fails to meet the Guarantor Monetary Threshold at any time during the Franchise Agreement's term, Caption By Hyatt has the right to terminate the Franchise Agreement, subject to applicable notice and cure periods. This condition underscores the importance of maintaining the required financial stability of the guarantor throughout the duration of the franchise agreement. Prospective franchisees should carefully review Exhibit B-1 and understand the ongoing financial obligations and reporting requirements associated with the Guarantor Monetary Threshold.