What is the relationship between the Guarantor and the Franchisee in the Caption By Hyatt agreement?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, simultaneously herewith, Franchisee is entering into a Brand Hotel Franchise Agreement (as amended, modified or amended and restated from time to time, the "Franchise Agreement") with Hyatt with respect to the Hotel;
WHEREAS, Guarantor is either an owner (whether direct or indirect) of Franchisee or otherwise has a direct or indirect relationship with Franchisee or its affiliates, Guarantor will benefit significantly from Hyatt's entering into the Franchise Agreement with Franchisee, and Hyatt will not enter into the Franchise Agreement unless each of the undersigned agrees to sign and comply with the terms of this Guaranty;
WHEREAS, as a condition to entering into the Franchise Agreement, Hyatt has required that Guarantor guarantee the payment and performance of the Guaranteed Obligations (as defined herein), subject to the terms of this Guaranty.
NOW, THEREFORE, as a material inducement to Hyatt entering into the Franchise Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby does irrevocably and unconditionally warrant and represent unto and covenant as follows:
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- Recitals; Defined Terms. The recitals above are a part of this Guaranty, form a basis for this Guaranty, and shall be considered prima facie evidence of the facts and documents referred to therein. Defined terms used but not defined herein shall have the meanings ascribed to them in the Franchise Agreement.
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- Guaranty. Guarantor hereby irrevocably and unconditionally personally guarantees to Hyatt and its successors and assigns Franchisee's punctual payment and performance of, and agrees to be personally bound by and personally liable for the breach of, each and every Guaranteed Obligation. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.
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- Guaranteed Obligations. As used herein, the term "Guaranteed Obligations" means (i) Franchisee's payment in full of all of Franchisee's monetary obligations including but
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, the Guarantor's role is to ensure the Franchisee meets its financial and performance obligations. The Guarantor is often an owner or affiliate of the Franchisee and benefits from the Franchise Agreement between the Franchisee and Hyatt. Hyatt requires a Guarantor as a condition of entering into the Franchise Agreement. The Guarantor irrevocably guarantees the Franchisee's obligations to Hyatt.
The Guarantor consents to the terms of the guaranty applying to each undersigned party in their individual capacity. The Guarantor's liability is joint and several with the Franchisee and any other parties comprising the Guarantor. The Guarantor must fulfill any payment or performance required if the Franchisee fails to do so, upon demand. This liability remains in effect regardless of any actions Hyatt takes or doesn't take against the Franchisee or any extensions or modifications to the Franchise Agreement. The Guarantor also agrees to cooperate with Hyatt regarding auditing and reporting requirements related to maintaining a certain monetary threshold.
The Franchisee must ensure that at least one Controlling Owner signs Hyatt's Guaranty and Assumption of Obligations. The Franchisee warrants that at least one Guarantor meets a certain monetary threshold at the start of the agreement and maintains it throughout the term. The Guarantor also waives certain rights, including rights to reimbursement or subrogation against the Franchisee, ensuring they are not considered a creditor of the Franchisee in bankruptcy proceedings. They also waive the right to require Hyatt to pursue remedies against the Franchisee before seeking recourse from the Guarantor.