How are third-party owners and franchisees invoiced for Caption By Hyatt's system-wide assessment fee?
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 uses a fund model for its system-wide services. Under this model, Caption By Hyatt invoices third-party owners and franchisees a system-wide assessment fee on a monthly basis. The revenues from these fees are recognized over time as Caption By Hyatt provides the services. These revenues are classified as "revenues for reimbursed costs" on the company's consolidated statements of income.
Caption By Hyatt retains discretion over how it spends the revenues collected from these system-wide assessment fees. This means that Caption By Hyatt acts as the principal in managing these funds. The expenses related to the system-wide programs are recognized as incurred and are also reported as "reimbursed costs" on the consolidated statements of income.
Caption By Hyatt intends to manage these system-wide programs to break even over time, meaning it does not aim to profit from these services. However, the timing of revenue collection from owners and the timing of expenses incurred to operate the programs may not always align. Any difference between the revenues and expenses will impact Caption By Hyatt's net income. This arrangement is common in franchise systems where system-wide fees are used to fund marketing, technology, or other shared services.