What happens if the Base Index is no longer published for a Caption By Hyatt franchise?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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, if the Base Index, which is the Consumer Price Index for All Urban Consumers for All Items published by the U.S. Department of Labor, Bureau of Labor Statistics, is no longer published, Caption By Hyatt has the right to designate another reasonably comparable index. This substitute index would be used for calculating changes in the cost of living or purchasing power for consumers.
This provision is important for prospective Caption By Hyatt franchisees because the Base Index is used to adjust certain financial thresholds, such as the Guarantor Monetary Threshold, annually. The Guarantor Monetary Threshold impacts the minimum net worth and liquid assets that the guarantor of the franchise agreement must maintain. By allowing Caption By Hyatt to designate a comparable index, the franchise agreement ensures that these financial benchmarks can continue to be adjusted for inflation even if the original index becomes unavailable.
For a prospective franchisee, this means that the financial requirements tied to the guaranty will continue to be adjusted annually, even if the original index is discontinued. While Caption By Hyatt has the discretion to choose a new index, it must be "reasonably comparable," which provides some assurance that the adjustment will remain fair and relevant to the economic conditions affecting consumers. Franchisees should monitor any changes to the designated index and understand how these changes may affect their obligations under the Guaranty.