Are the rights granted under the Caption By Hyatt Franchise Agreement exclusive?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Because we and others may establish and operate one or more Brand Hotels and other Hyatt Network Hotels within the Area of Protection after the AOP Term expires, and during the AOP Term under the exception above, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets we own, or from other channels of distribution or competitive brands that we control.
Except for the limited exclusivity described above, your rights under the Franchise Agreement are nonexclusive in all respects, the Hotel has no territorial protection whatsoever, and we and our affiliates have the right without restriction to engage in all activities we and they desire (including concerning all types of lodging facilities) at any time and place, whether or not using the Proprietary Marks or any aspect of the Hotel System, and whether or not those activities compete with your Hotel. We and our affiliates may use or benefit from, among other things, common computer systems, administrative systems, reservation systems, purchasing systems, and personnel and may provide some or all of the System Services to other Hyatt Network Hotels and other hotels, lodging facilities and other businesses, even if they compete with the Hotel. You will have no right to pursue any claims, demands, or damages as a result of these activities, whether under breach of contract, unfair competition, implied covenant of good faith and fair dealing, divided loyalty, or other theories.
Source: Item 12 — Territory (FDD pages 65–67)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the rights granted under the Franchise Agreement are not exclusive. While franchisees are granted an Area of Protection (AOP) and an AOP Term, these are subject to exceptions and limitations. The AOP Term typically lasts for 3 years after the hotel's opening date, beginning on the effective date of the Franchise Agreement. The size of the Area of Protection varies based on the hotel's size and location, ranging from a few blocks in urban areas to a 3-mile radius in suburban areas.
During the AOP term, Caption By Hyatt and its affiliates generally will not open or authorize others to open another Brand Hotel within the Area of Protection. However, there is a significant exception: if Caption By Hyatt or its affiliates acquire a group of at least 4 hotels, they have the right to convert any acquired hotels within the Area of Protection to operate under the Caption By Hyatt brand, even if not all acquired hotels are converted. After the AOP Term expires, Caption By Hyatt and its affiliates can open or authorize others to open other Brand Hotels within the Area of Protection.
Beyond the limited exclusivity during the AOP Term, the Franchise Agreement is nonexclusive. Caption By Hyatt and its affiliates retain the unrestricted right to engage in any activities, including those that compete with the franchisee's hotel, at any time and place. They can also use common systems and provide services to other Hyatt Network Hotels, even if those hotels compete with the franchisee. Franchisees have no right to claim damages as a result of these activities. Furthermore, there are no restrictions on where Caption By Hyatt or other Brand Hotel operators may solicit customers or accept orders, and Caption By Hyatt may use various channels of distribution to make sales within the Area of Protection without compensating the franchisee. These factors mean that a Caption By Hyatt franchisee could face competition from other franchisees, company-owned outlets, or other channels of distribution controlled by Caption By Hyatt.