What is prohibited regarding competition for a Caption By Hyatt franchisee during the term of the franchise agreement?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| q. Non-competition covenants during the term of the franchise | 4.2, 4.10 and 4.11 of Franchise Agreement | No covenant not to compete, but neither you nor Hotel management company may be a Competing Brand Owner. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 75–81)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, there is no covenant not to compete during the term of the franchise agreement. However, the franchisee nor the Hotel management company may be a Competing Brand Owner. This means that while franchisees are not explicitly restricted from engaging in other business ventures, they are prohibited from owning or operating a competing hotel brand during the term of their franchise agreement with Caption By Hyatt.
This restriction is fairly standard in the franchise industry, as franchisors want to protect their brand and market share. By preventing franchisees from being involved with competing brands, Caption By Hyatt aims to ensure that franchisees remain fully committed to the success of their Caption By Hyatt location. This also helps to maintain the integrity and consistency of the Caption By Hyatt brand across all franchised locations.
Prospective franchisees should carefully consider this restriction and ensure that they do not have any existing ownership or management interests in competing hotel brands before signing a franchise agreement with Caption By Hyatt. It is also important to understand the definition of "Competing Brand Owner" as defined in the franchise agreement to avoid any potential conflicts of interest during the term of the franchise.