What are the two ways to define a 'Controlling Ownership Interest' in a Caption By Hyatt franchise?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
A "Controlling Ownership Interest" in you or one of your owners (if that owner is a legal entity) means, whether directly or indirectly, either: (a) the record or beneficial ownership of, or right to control, 50% or more of the investment capital, equity, rights to receive profits or losses, or other rights to participate in your or the entity's results; or (b) the effective control of the power to direct or cause the direction of your or that entity's management and policies, including a general partnership interest (if the entity is a partnership) and a manager or managing member interest (if the entity is a limited liability company), or the power to appoint or remove any party having these powers. In addition, in the case of (a) or (b), the determination of whether a "Controlling Ownership Interest" exists is made both immediately before and immediately after a proposed transfer.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 71–74)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, a 'Controlling Ownership Interest' is defined in two ways. First, it can mean directly or indirectly owning, or having the right to control, 50% or more of the investment capital, equity, rights to receive profits or losses, or other rights to participate in the entity's results. This definition focuses on the financial stake and associated rights within the franchise.
Second, a 'Controlling Ownership Interest' can also mean having effective control over the power to direct or cause the direction of the entity's management and policies. This includes holding a general partnership interest (if the entity is a partnership) or a manager or managing member interest (if the entity is a limited liability company), or the power to appoint or remove any party having these powers. This definition emphasizes the ability to influence the operational and strategic decisions of the franchise.
The determination of whether a 'Controlling Ownership Interest' exists is made both immediately before and immediately after a proposed transfer, ensuring that any transfer of ownership does not disrupt the control and management of the Caption By Hyatt franchise. This definition is important because Caption By Hyatt requires owners with a Controlling Ownership Interest to sign a Guaranty, ensuring they are personally liable for the franchise's obligations.