What is the required action for a Caption By Hyatt franchisee if the hotel is subject to condemnation?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
10.1 Condemnation. Franchisee must immediately notify Hyatt of any proposed taking all or a substantial portion of the Hotel by eminent domain, condemnation or expropriation. If the parties do not otherwise agree to relocate the Hotel, then either party may terminate this Agreement immediately upon written notice to the other. If Franchisee and its Owners sign a Termination Agreement, then Franchisee shall not be required to pay liquidated damages pursuant to Section 16.5 at the time of termination. However, such Termination Agreement shall provide that if Franchisee or any of its Affiliates begins construction on or operation of a hotel of the same Hotel Type at any location within the Area of Protection at any time during the twenty-four (24)
month period following the effective date of termination of this Agreement, other than a Hyatt Network Hotel or a hotel that was already under contract to be developed at that particular location within the Area of Protection on the date that the Termination Agreement is signed, then Franchisee or its Owners must pay Hyatt liquidated damages equal to the amount set forth in Exhibit B-1 multiplied by the number of guest rooms in that new hotel of the same Hotel Type. If Franchisee and its Owners fail to sign such Termination Agreement within a reasonable time after Hyatt delivers it to Franchisee, then Franchisee must pay Hyatt liquidated damages pursuant to Section 16.5 at the time of termination, in addition to complying with its other post-termination obligations under this Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, if all or a substantial portion of the hotel is taken by eminent domain, condemnation, or expropriation, the franchisee must immediately notify Hyatt. Following this notification, if both parties do not agree to relocate the hotel, either party has the right to terminate the franchise agreement with written notice.
If the Caption By Hyatt franchisee and its owners sign a termination agreement, the franchisee will not be required to pay liquidated damages as described in Section 16.5 of the agreement at the time of termination. However, this termination agreement stipulates that if the franchisee or any of its affiliates begins construction or operation of a hotel of the same type within the Area of Protection within 24 months following the termination date (excluding a Hyatt Network Hotel or a hotel already under contract for development in that location), they must pay Hyatt liquidated damages. The liquidated damages will be calculated based on Exhibit B-1, multiplied by the number of guest rooms in the new hotel.
If the Caption By Hyatt franchisee and its owners do not sign the termination agreement within a reasonable time after Hyatt delivers it, the franchisee must pay Hyatt liquidated damages as per Section 16.5 at the time of termination. In addition to paying liquidated damages, the franchisee must also comply with all other post-termination obligations outlined in the franchise agreement.