Under Article VIII, what is the nature of the relationship between Hyatt and the Caption By Hyatt franchisee?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
8.1 Relationship of the Parties. Franchisee is an independent contractor. Neither Hyatt nor Franchisee is the legal representative or agent of, or has the power to obligate, the other
for any purpose. No partnership, joint venture, affiliate, agency, fiduciary, or employment relationship is intended or created by this Agreement. Hyatt and Franchisee may not make any express or implied agreements, warranties, guarantees, or representations, or incur any debt, in the name or on behalf of the other nor represent that Hyatt's and Franchisee's relationship is other than franchisor and franchisee. Hyatt will not be obligated for any damages to any person or property directly or indirectly arising out of the Hotel's operation or the business Franchisee conducts under this Agreement.
8.2 Franchisee's Notices to Public Concerning Independent Status. Franchisee must provide notices making clear to the public that Hyatt is not the Hotel's owner or operator and is not accountable for events occurring at the Hotel. Franchisee also agrees to communicate clearly with Hotel employees in employment agreements, handbooks and other materials that Franchisee (or the Management Company, as applicable), and not Hyatt or its Affiliates, is the employer of all Hotel employees.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, Article VIII clarifies the relationship between the franchisee and Hyatt. The franchisee operates as an independent contractor, and neither party can legally represent or obligate the other. This means the franchisee has autonomy in running the Caption By Hyatt hotel, but also assumes responsibility for its operations.
Specifically, the agreement emphasizes that no partnership, joint venture, agency, or employment relationship exists between Hyatt and the franchisee. This distinction is crucial because it means Hyatt is not liable for any damages or issues arising from the hotel's operation. The franchisee is responsible for making it clear to the public and hotel employees that Hyatt is not the owner or operator and is not accountable for events at the hotel. This separation protects Hyatt from potential legal or financial liabilities related to the franchisee's business.
This type of arrangement is standard in franchising, where the franchisee benefits from the brand recognition and support of the franchisor, but maintains operational independence. The franchisee must indemnify and defend Hyatt from any claims arising from the hotel's operation, further underscoring the independent nature of the relationship. Prospective franchisees should carefully consider the implications of this independent contractor status, including their responsibilities for managing the hotel and handling any liabilities that may arise.