Does the Caption By Hyatt Guaranty cover the Franchisee's payment of liquidated damages?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Guarantor hereby waives: (i) all rights to payments and claims for reimbursement or subrogation that Guarantor may have against Franchisee arising as a result of the undersigned's execution of and performance under this Guaranty, for the express purpose that none of the undersigned shall be deemed a "creditor" of Franchisee under any applicable bankruptcy law with respect to Franchisee's obligations to Hyatt; (ii) all rights to require Hyatt to proceed against Franchisee for any payment required under the Franchise Agreement, proceed against or exhaust any security from Franchisee, take any action to assist any of the undersigned in seeking reimbursement or subrogation in connection with this Guaranty or pursue, enforce or exhaust any remedy, including any legal or equitable relief, against Franchisee; (iii) any benefit of, any right to participate in, any security now or hereafter held by Hyatt; and (iv) acceptance and notice of acceptance by Hyatt of Guarantor's undertakings under this Guaranty, all presentments, demands and notices of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest, notices of dishonor, notices of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed (except as otherwise expressly provided herein or in the Franchise Agreement), and any other notices and legal or equitable defenses to which Guarantor may be entitled.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
The 2025 Caption By Hyatt Franchise Disclosure Document discusses liquidated damages and the Guaranty agreement, but it does not explicitly state whether the Guaranty covers the franchisee's payment of liquidated damages. However, the FDD does state that the guarantor waives certain rights.
Specifically, the guarantor waives "all rights to payments and claims for reimbursement or subrogation that Guarantor may have against Franchisee arising as a result of the undersigned's execution of and performance under this Guaranty, for the express purpose that none of the undersigned shall be deemed a 'creditor' of Franchisee under any applicable bankruptcy law with respect to Franchisee's obligations to Hyatt." This means the guarantor cannot seek reimbursement from the franchisee for payments made under the guaranty, intending to prevent the guarantor from being considered a creditor in bankruptcy proceedings.
Additionally, the guarantor waives "all rights to require Hyatt to proceed against Franchisee for any payment required under the Franchise Agreement, proceed against or exhaust any security from Franchisee, take any action to assist any of the undersigned in seeking reimbursement or subrogation in connection with this Guaranty or pursue, enforce or exhaust any remedy, including any legal or equitable relief, against Franchisee." This clause indicates that Caption By Hyatt is not obligated to pursue the franchisee before seeking payment from the guarantor, and the guarantor cannot force Caption By Hyatt to exhaust other remedies before enforcing the guaranty.
To fully understand whether the Guaranty covers the franchisee's payment of liquidated damages, a prospective franchisee should review the specific terms outlined in the Guaranty agreement within the Franchise Agreement and seek clarification from Caption By Hyatt regarding this matter.