Can Hyatt operate other lodging facilities that compete with the 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.
- 1.5 Right of First Offer. If Hyatt determines that the Site is located in a strategic market for Hyatt and its Affiliates, then simultaneously with signing this Agreement, Hyatt and Franchisee shall sign and deliver to each other the Right of First Offer attached as Exhibit C. Hyatt and Franchisee acknowledge that, unless they sign and deliver to each other the Right of First Offer, the terms of the Right of First Offer and Exhibit C shall not apply to the Hotel or Franchisee.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, Hyatt and its affiliates have the unrestricted right to engage in any activities, including operating competing lodging facilities, regardless of whether they use Caption By Hyatt's proprietary marks or systems. This means that Hyatt can operate other franchised and non-franchised systems for lodging facilities, even those with the "Hyatt" name, that may compete directly with a franchisee's Caption By Hyatt hotel, even within the Area of Protection. Hyatt and its Affiliates may also use common systems and personnel, and may provide System Services to other Hyatt Network Hotels and other hotels, lodging facilities and other businesses, even if they compete with the Hotel.
This lack of exclusivity means a Caption By Hyatt franchisee bears the risk of direct competition from other Hyatt-affiliated properties. The franchisee is not entitled to pursue claims or damages resulting from these competitive activities, whether based on breach of contract, unfair competition, or other legal theories. This is a significant consideration for prospective franchisees, as it highlights the potential for competition from within the Hyatt network itself.
While the franchisee receives limited exclusivity within their Area of Protection as described in Section 1.3 of the franchise agreement, this protection does not prevent Hyatt from developing competing lodging facilities. The FDD also mentions a Right of First Offer (Section 1.5) that may apply if the site is in a strategic market, but this right requires a separate agreement between Hyatt and the franchisee.
Prospective franchisees should carefully consider the implications of this non-exclusive arrangement and the potential for competition from other Hyatt-affiliated properties when evaluating the Caption By Hyatt franchise opportunity. It would be prudent to discuss with Hyatt the criteria for determining a "strategic market" and the details of the Right of First Offer to better understand the potential competitive landscape.