Can Hyatt and its affiliates engage in activities that compete with a Caption By Hyatt Hotel?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.4 No Other Restrictions. Except for the limited exclusivity provided in Section 1.3, Franchisee's rights under this Agreement are nonexclusive in all respects, the Hotel has no territorial protection whatsoever, and Hyatt and its Affiliates have the right without restriction to engage in any and all activities Hyatt and they desire (including with respect to any and 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 the Hotel. Without limiting the foregoing, Franchisee acknowledges that Hyatt and its Affiliates currently operate other franchised and non-franchised systems for lodging facilities and other accommodations and hospitality affiliations that use different brand names, trademarks, and service marks, including those with the "Hyatt" name as part of their brand name, some of which might operate and have facilities in the Area of Protection during the AOP Term, that will compete directly with Franchisee. Hyatt and its 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 System Services to other Hyatt Network Hotels and other hotels, lodging facilities and other businesses, even if they compete with the Hotel. Franchisee 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 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the franchise agreement provides very limited exclusivity to the franchisee. Specifically, Caption By Hyatt and its affiliates retain the unrestricted right to engage in any activities they desire, including those that compete directly with a franchisee's Caption By Hyatt hotel. This includes developing and operating other lodging facilities, even within the franchisee's Area of Protection. These facilities may operate under different brand names, trademarks, and service marks, including those affiliated with the "Hyatt" name.
Caption By Hyatt and its affiliates may also leverage shared resources such as computer systems, administrative systems, reservation systems, purchasing systems, and personnel across their various lodging facilities, including those that compete with the franchisee's hotel. The franchisee acknowledges that these activities may occur and agrees not to pursue any claims for damages resulting from such competition, regardless of the legal theory.
This lack of broad territorial protection is a significant consideration for prospective Caption By Hyatt franchisees. While the franchise agreement may offer some limited exclusivity within a defined Area of Protection, it explicitly allows Caption By Hyatt and its affiliates to operate competing businesses nearby. This could impact the franchisee's revenue and market share. It is essential for potential franchisees to carefully evaluate the competitive landscape in their desired location and understand the potential for competition from other Hyatt-affiliated properties.