What happens if a Caption By Hyatt franchisee fails to comply with any System Standard?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
s), each month Franchisee shall deposit into a separate account that Franchisee controls (the "CapEx Account") the amount set forth in Exhibit B-1. Upon Hyatt's reasonable request, Franchisee will periodically provide Hyatt information concerning the funds in and expenditures from the CapEx Account. Franchisee shall use the funds in the CapEx Account only for the purpose of making approved capital expenditures and complying with its upgrade and other obligations under this Section 4.7, although such obligations may require Franchisee to spend more than the amount then in the CapEx Account.
4.8 Inspections/Compliance Assistance and Quality Assurance and Compliance Program. Hyatt may inspect the Hotel at any time, with or without notice to Franchisee, to determine whether Franchisee and the Hotel are complying with the Hotel System, System Standards, and other provisions of this Agreement. Franchisee must give Hyatt's representatives free lodging (subject to availability) during the inspection period. The Hotel also must participate in and pay its allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program. If Hyatt determines that the Hotel is failing to comply with the System Standards or any other terms and conditions of this Agreement, then, without limiting Hyatt's other
rights or remedies under this Agreement, any other agreement or applicable law, Franchisee must: (a) reimburse Hyatt for its costs related to that non-compliance, including fees, travel and living expenses, guest satisfaction payments or expenses, and other costs for administering any necessary actions, follow-up inspections, audits or re-evaluation visits until the failures to comply have been fully corrected, and (b) ensure that applicable Hotel personnel attend meetings and additional brand standard training programs that Hyatt specifies, at Franchisee's sole expense, relating to that non-compliance.
- 4.9 Compliance With Laws. Franchisee must strictly comply with all laws, rules, regulations and other legal and governmental requirements concerning the Hotel's development and operation, including by (a) ensuring that the Hotel is at all times in full compliance with the Accessibility Laws; (b) paying all taxes when due; and (c) obtaining and maintaining (or ensuring that the Management Company, F&B Operator and/or Spa Operator, as applicable, obtains and maintains) all licenses (including all liquor licenses) and permits necessary to operate the Hotel, including the F&B Operations and Spa Operations (if the Hotel has Spa Operations). Franchisee agrees to comply, and to assist Hyatt to the fullest extent possible in its efforts to comply, with the Trade Restriction Laws, Anti-Corruption Laws and Privacy Laws. In connection with that compliance, Franchisee (on behalf of itself and its Owners, excluding any Public Owners) certifies, represents, and warrants as of the Effective Date that none of Franchisee's nor any such Owner's property or interests is subject to being blocked under, and that Franchisee and such Owners otherwise are not in violation of, any of the Trade Restriction Laws.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, if a franchisee fails to comply with any System Standard, several consequences may arise. Hyatt has the right to inspect the hotel at any time, with or without notice, to ensure compliance with the Hotel System, System Standards, and other provisions of the agreement. The franchisee is obligated to provide free lodging to Hyatt's representatives during these inspections, subject to availability. Additionally, the hotel must participate in and contribute to the Quality Assurance and Compliance Program.
If Hyatt determines non-compliance, the franchisee must reimburse Hyatt for all associated costs, including fees, travel and living expenses, guest satisfaction payments, and other costs related to administering necessary actions, follow-up inspections, audits, or re-evaluation visits until the issues are resolved. Furthermore, the franchisee must ensure that relevant hotel personnel attend additional brand standard training programs specified by Hyatt, at the franchisee's expense, to address the non-compliance. Hyatt also retains the right to modify System Standards for any Brand Hotel based on specific conditions or factors relevant to the hotel's successful operation.
In cases where the franchisee fails to remedy a default or comply with the agreement after receiving written notice, Hyatt can suspend the franchisee's right to use and access the CRS, GDS, ADS, and other System Services. Hyatt may also remove the hotel from its advertising publications and programs and remove the hotel's webpage from the Hotel System. Moreover, if the Management Company fails to comply with the agreement, including System Standards, or remains in a non-compliant status under Hyatt's Quality Assurance and Compliance Program for three or more consecutive months, Hyatt may revoke its approval of the Management Company or impose additional requirements at the Management Company's or franchisee's expense.