If a Caption By Hyatt Hotel is damaged, what is the Franchisee's immediate required action?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.2 Damage.
If the Hotel is damaged by fire, flood, accident, hurricane or other casualty, Franchisee must notify Hyatt immediately.
- (a) If the cost to repair the damage is less than or equal to the Damage Threshold, then Franchisee must repair the damage promptly according to the System Standards and this Agreement's other terms and conditions.
If the damage or repair requires Franchisee to close all or any portion of the Hotel, then Franchisee must commence reconstruction as soon as practicable (but in any event within four (4) months) after closing the Hotel and reopen for continuous business operations as a Brand Hotel as soon as practicable (but in any event within twenty-four (24) months) after closing the Hotel, but not without complying with this Agreement's other terms and conditions.
The Term will be extended for the period of time during which the Hotel is closed pursuant to this Section 10.2(a), and Franchisee need not make any payments of Royalty Fees or System Services Charges while the Hotel is closed pursuant to this Section 10.2(a) unless Franchisee receives insurance proceeds compensating Franchisee for lost Gross Rooms Revenue during such period, in which case Franchisee must pay Royalty Fees and System Services Charges on the amount of proceeds received allocable to such loss.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, if the hotel is damaged by fire, flood, accident, hurricane, or other casualty, the franchisee must notify Hyatt immediately. This requirement ensures that Hyatt is promptly informed of any significant events that could impact the brand's reputation or the hotel's operations.
Following the initial notification, the franchisee's subsequent actions depend on the cost to repair the damage. If the repair cost is less than or equal to the Damage Threshold, the franchisee is obligated to repair the damage promptly, adhering to the System Standards and other terms outlined in the Franchise Agreement. This ensures that the hotel is restored to its operational condition as quickly as possible while maintaining brand standards.
If the damage requires the closure of all or part of the hotel, the franchisee must begin reconstruction as soon as practical, but no later than four months after the closure. The hotel must then reopen for continuous business operations as a Brand Hotel as soon as practical, but no later than twenty-four months after closing, while still complying with all other terms and conditions of the agreement. The term of the agreement will be extended for the period the hotel is closed, and the franchisee may not have to make Royalty Fees or System Services Charges while the hotel is closed unless they receive insurance proceeds compensating them for lost Gross Rooms Revenue during that time.