How does the size of the Area of Protection vary for a Caption By Hyatt hotel?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
ty requiring you to close all or a portion of the Hotel, you may relocate the Hotel to a location we approve.
Unless the Hotel is an operating Brand Hotel, we and you will agree on the boundaries of your "Area of Protection" before signing the Franchise Agreement. We typically define the Area of Protection's boundaries using geographic references (such as streets or rivers) or as a circle with the Hotel at its center. The Area of Protection's size will vary depending on the Hotel's size and location. It could be as small as a few blocks in urban areas and up to about a 3 mile radius from the Hotel's entrance in certain suburban areas. We also will assign an "AOP Term" and list the AOP Term in the Franchise Agreement before we and you sign it. The AOP Term is the time period during which your rights in the Area of Protection will apply. The AOP Term begins on the effective date of the Franchise Agreement and typically ends 3 years after the Hotel's opening date.
Subject to the one exception below, neither we nor any of our affiliates will open and operate during the AOP Term, nor authorize any other party to open and operate during the AOP
Term, any other Brand Hotel the physical premises of which are located within the Area of Protection.
Source: Item 12 — Territory (FDD pages 65–67)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the size of the Area of Protection (AOP) granted to franchisees varies based on the hotel's size and location. The FDD specifies that the AOP's boundaries are determined before signing the Franchise Agreement, using geographic references like streets or rivers, or as a circle centered on the hotel.
The size of the AOP for a Caption By Hyatt can range from just a few blocks in dense urban environments to a radius of up to approximately three miles in suburban locations. This variation reflects the different competitive landscapes and market densities in different areas. A smaller AOP in an urban area acknowledges the higher concentration of businesses and potential customers, while a larger AOP in a suburban area aims to provide a reasonable degree of protection in a less dense market.
It's important to note that if the hotel is an already operating Caption By Hyatt, the franchisee may not receive any Area of Protection or AOP Term when signing the Franchise Agreement. The determination of whether to provide any Area of Protection is based on the time during which the Hotel has operated under the "Caption by Hyatt®" name and the market conditions under which the Hotel operates. This means that franchisees acquiring existing Caption By Hyatt hotels may not have the same territorial protections as those developing new locations.
The AOP Term, which is the duration of the franchisee's rights within the Area of Protection, typically lasts for three years from the hotel's opening date. After the AOP Term expires, Caption By Hyatt and its affiliates can operate or authorize others to operate other Brand Hotels within the former Area of Protection. This means the Area of Protection is not permanent, and franchisees may face increased competition after the AOP Term ends. Furthermore, the FDD specifies that Caption By Hyatt may acquire other hotel groups and convert them to operate under the Proprietary Marks and the Hotel System, even within the Area of Protection, which would introduce competition during the AOP Term.