Does a Caption By Hyatt hotel have any territorial protection whatsoever?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Except for the limited exclusivity described above, your rights under the Franchise Agreement are nonexclusive in all respects, the Hotel has no territorial protection whatsoever, and we and our affiliates have the right without restriction to engage in all activities we and they desire (including concerning all types of lodging facilities) at any time and place, whether or not using the Proprietary Marks or any aspect of the Hotel System, and whether or not those activities compete with your Hotel. We and our affiliates may use or benefit from, among other things, common computer systems, administrative systems, reservation systems, purchasing systems, and personnel and may provide some or all of the System Services to other Hyatt Network Hotels and other hotels, lodging facilities and other businesses, even if they compete with the Hotel. You will have no right to pursue any claims, demands, or damages as a result of these activities, whether under breach of contract, unfair competition, implied covenant of good faith and fair dealing, divided loyalty, or other theories.
Source: Item 12 — Territory (FDD pages 65–67)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, a franchisee may receive an Area of Protection (AOP), but the hotel itself has no territorial protection whatsoever. The Franchise Agreement stipulates that, except for the limited exclusivity within the AOP, Caption By Hyatt's rights are nonexclusive in all respects. Caption By Hyatt and its affiliates retain the unrestricted right to engage in any activities they desire, concerning all types of lodging facilities, at any time and place, even if those activities compete with the franchisee's hotel. This includes using common systems and providing services to other Hyatt Network Hotels and businesses, regardless of competition.
The Area of Protection (AOP) is not guaranteed, particularly if the hotel is already operating under the Caption By Hyatt brand. If granted, the size of the AOP varies based on the hotel's size and location, potentially ranging from a few blocks in urban areas to a 3-mile radius in suburban areas. The AOP Term, which dictates how long the territorial rights apply, typically ends three years after the hotel's opening date. After the AOP Term concludes, the franchisee loses all territorial rights, and Caption By Hyatt can operate or authorize others to operate competing hotels within the former AOP.
Even during the AOP Term, Caption By Hyatt reserves the right to convert acquired hotels within the Area of Protection to the Caption By Hyatt brand, provided they acquire a group of at least four hotels. This conversion can occur regardless of whether the other acquired hotels are converted. Furthermore, there are no restrictions on where Caption By Hyatt or other Brand Hotel operators may solicit customers or accept orders, including through channels like the Internet, without compensating the franchisee. The franchisee also has no options or rights of first refusal to acquire additional franchises, and continuation of territorial rights is not contingent on sales volume or market penetration.