How are Caption By Hyatt's system-wide services accounted for?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Hyatt's system-wide services are accounted for under a fund model whereby third-party owners and franchisees are invoiced a system-wide assessment fee on a monthly basis. We recognize the revenues over time as services are provided in revenues for reimbursed costs on our consolidated statements of income. We have discretion over how we spend program revenues, and therefore, we are the principal. Expenses related to the system-wide programs are recognized as incurred in reimbursed costs on our consolidated statements of income. Over time, we intend to manage the system-wide programs to break-even and not earn a profit on these services, but the timing of revenues received from the owners may not align with the timing of the expenses incurred to operate the programs. Therefore, any difference between the revenues and expenses will impact our net income.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the brand accounts for its system-wide services using a fund model. Under this model, Caption By Hyatt invoices third-party owners and franchisees a system-wide assessment fee on a monthly basis. The revenues generated from these fees are recognized over time as services are provided; they are recorded as revenues for reimbursed costs on the company's consolidated statements of income. Hyatt acts as the principal in these transactions, meaning it has discretion over how the program revenues are spent.
Expenses related to the system-wide programs are recognized as incurred and are also recorded as reimbursed costs on Caption By Hyatt's consolidated statements of income. The brand intends to manage these system-wide programs to break even over time, without earning a profit on these services. However, the timing of revenue received from owners and franchisees may not always align with the timing of expenses incurred to operate the programs.
Any difference between the revenues and expenses from these system-wide services will impact Caption By Hyatt's net income. This accounting approach ensures that the costs of these services are covered by those who benefit from them (the owners and franchisees) while aiming for a neutral impact on the company's profitability. For a prospective franchisee, this means understanding that a portion of their monthly fees contributes to these system-wide services, and the overall financial health of these programs can indirectly affect the franchisor's financial performance.