How are System Services Charges determined for a Caption By Hyatt franchise, and are they subject to mark-up?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
ee of, anyone listed in subsection (a).
"Security Interest" means any lien, charge, pledge, mortgage, security interest or other encumbrance.
"Spa Operations" means all spa and related operations and services for Hotel guests and patrons, consisting of all therapy, massage and other treatments, salon services and other sparelated services, if applicable for the Hotel.
"Spa Operator" means the operator of Spa Operations (if any) at the Hotel, other than Franchisee or the Management Company.
"System Services" means those services generally made available by the Hyatt Group from time to time on a central, regional, or other shared or group basis (whether in whole or in part) to all or certain Brand Hotels and other Hyatt Network Hotels that the Hyatt Group reasonably determines shall be provided such services, and which are categorized as either Mandatory Services or Non-Mandatory Services.
"System Services Charges" means the amounts that the Hyatt Group charges the Hotel, and Franchisee hereby agrees to pay, for the Hotel's equitably allocable share of the System Services Costs attributable to the System Services in which the Hotel participates (or is obligated to participate), as periodically determined by the Hyatt Group.
"System Services Costs" means, with respect to any of the System Services in which the Hotel participates (or is required to participate), all costs actually incurred or properly accrued by any member of Hyatt Group during the period of determination in respect of the provision of such System Services, including out-of-pocket expenses, costs for employees, occupancy costs, capital costs, administrative expenses, carrying costs and other costs incurred directly or indirectly in providing System Services.
"System Standards" means standards, specifications, procedures, and rules for operations, marketing, construction, equipment, furnishings, and quality assurance that Hyatt implements and may periodically modify for Brand Hotels.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, System Services Charges are the amounts that the Hyatt Group charges the Hotel for its equitably allocable share of the System Services Costs attributable to the System Services in which the Hotel participates (or is obligated to participate). These charges are periodically determined by the Hyatt Group. Franchisees are required to pay these charges. System Services Charges will include an allocable proportion of certain System Services Costs incurred during the period before the Hotel opens.
System Services Costs include all costs actually incurred or properly accrued by any member of Hyatt Group during the period of determination in respect of the provision of such System Services. This includes out-of-pocket expenses, costs for employees, occupancy costs, capital costs, administrative expenses, carrying costs and other costs incurred directly or indirectly in providing System Services.
The System Services Costs will not be subject to any mark-up, premium, or profit on any Mandatory Services, but may include a profit or markup component on Non-Mandatory Services as described above or as determined by the Hyatt Group. Any allocation of shared costs that the Hyatt Group makes in good faith and with the intention of fairly allocating such costs to System Services shall be binding on the parties. The Hyatt Group may periodically change its method of allocation of the System Services Costs among Participating Hotels, provided that such method of allocation shall at all times be determined on a reasonable, equitable and nondiscriminatory basis.