How does Caption By Hyatt recognize revenues related to system-wide services?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Hyatt's system-wide services are accounted for under a fund model whereby third-party owners and franchisees are invoiced a system-wide assessment fee on a monthly basis. We recognize the revenues over time as services are provided in revenues for reimbursed costs on our consolidated statements of income. We have discretion over how we spend program revenues, and therefore, we are the principal. Expenses related to the system-wide programs are recognized as incurred in reimbursed costs on our consolidated statements of income. Over time, we intend to manage the system-wide programs to break-even and not earn a profit on these services, but the timing of revenues received from the owners may not align with the timing of the expenses incurred to operate the programs. Therefore, any difference between the revenues and expenses will impact our net income.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, system-wide services are accounted for using a fund model. Under this model, Caption By Hyatt invoices third-party owners and franchisees a system-wide assessment fee monthly. The revenues from these fees are recognized over time as the services are provided; they are recorded as revenues for reimbursed costs on the company's consolidated statements of income. Caption By Hyatt has the discretion over how these program revenues are spent, acting as the principal in these transactions.
Expenses related to the system-wide programs are recognized as they are incurred and are also recorded as reimbursed costs on the consolidated statements of income. Caption By Hyatt intends to manage these system-wide programs to break even, without earning a profit from these services. However, the timing of revenue received from owners and the expenses incurred to operate the programs may not always align.
Any difference between the revenues and expenses from these system-wide services will impact Caption By Hyatt's net income. For franchisees, this means that while the fees they pay contribute to a pool of funds used for system-wide benefits, the financial performance of these programs can affect the overall financial results of the franchisor.