What do 'net fees' represent for a Caption By Hyatt franchise, and what reduces the gross fees?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- Net fees—Net fees represent gross fees reduced by key money assets amortization and performance cure payments, which constitute payments to customers.
Consideration provided to customers related to key money assets is recorded in other assets and amortized to Contra revenue over the expected customer life, which is typically the initial term of the management and hotel services agreement or franchise agreement.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, net fees are calculated by taking the gross fees and reducing them by key money assets amortization and performance cure payments. These reductions represent payments made to customers.
Key money assets refer to consideration provided to customers. These assets are recorded and then amortized to contra revenue over the expected customer life, which typically aligns with the initial term of the management, hotel services, or franchise agreement. This amortization process effectively reduces the gross fees recognized by Caption By Hyatt over the life of the agreement.
In essence, the 'net fees' figure provides a clearer picture of the actual revenue Caption By Hyatt recognizes after accounting for payments or considerations given to customers, offering a more accurate representation of the financial inflows from franchise operations.