Under what circumstances will a Caption By Hyatt franchisee be required to pay indemnification fees?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
nce, Franchisee Compliance, and Guest Satisfaction. The Hotel must participate in quality assurance, compliance and guest satisfaction programs that we periodically develop and modify (collectively, the "Quality Assurance and Compliance Program"). You must pay your allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program. Our representatives may inspect or audit the Hotel at any time, with or without notice to you, to determine whether you and the Hotel are complying with the Hotel System, System Standards, and the terms of the Franchise Agreement, and you will give them free lodging (subject to availability) during the inspection period. If we determine that the Hotel is not complying with the Hotel System, System Standards, or any other Franchise Agreement provisions, then you will pay or bear the cost of the Hotel's allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program to correct the noncompliance. This includes (a) reimbursing our costs related to your non-compliance, such as travel and living expenses, guest satisfaction payments or expenses, and other costs for administering any necessary actions, follow-up inspections, audits or re-evaluation visits until you have fully corrected the non-compliance, (b) paying for meetings and additional brand standards training programs that we specify and require your personnel to attend relating to your non-compliance, and (c) paying program fees which we and/or our affiliates may use to promote guest satisfaction initiatives for Hyatt Network Hotels. These amounts will vary depending on the extent of your non-compliance and may increase if our costs increase. Currently, we impose the following fees for each 6-month FIP stage if the Hotel is placed in or remains in FIP protocols as a result of QA scores below requirements: (i) Stage 1 – $5,000 administrative fee; (ii) Stage 2 – $15,000 administrative fee; and (iii) Stage 3 – $20,000 administrative fee. In addition, if the Hotel does not achieve passing scores necessary to exit the FIP protocols by the end of Stage 3, the Hotel is placed in our BPP program, which requires the Hotel to pay an administrative fee of $45,000 per year. We may, as we deem appropriate, reduce or refund FIP fees based on improved performance and/or your accele
Source: Item 6 — Other Fees (FDD pages 20–36)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Caption By Hyatt franchisees may incur costs related to non-compliance with the Hotel System, System Standards, or the Franchise Agreement. These costs are part of the Quality Assurance and Compliance Program. If Caption By Hyatt determines that a hotel is not compliant, the franchisee will be responsible for covering the expenses associated with correcting the non-compliance.
These expenses can include reimbursing Caption By Hyatt's costs for addressing the non-compliance, such as travel and living expenses, guest satisfaction payments, and the costs of administering necessary actions, follow-up inspections, audits, or re-evaluation visits. Franchisees may also be required to pay for meetings and additional brand standards training programs for their personnel related to the non-compliance, as well as program fees used to promote guest satisfaction initiatives for Hyatt Network Hotels. The exact amounts can vary based on the extent of the non-compliance and any increases in Caption By Hyatt's costs.
Caption By Hyatt imposes specific fees for each 6-month Franchise Improvement Program (FIP) stage if a hotel's Quality Assurance (QA) scores fall below requirements. These fees are $5,000 for Stage 1, $15,000 for Stage 2, and $20,000 for Stage 3. If a hotel fails to achieve passing scores by the end of Stage 3, it is placed in the Brand Performance Program (BPP), which carries an administrative fee of $45,000 per year. However, Caption By Hyatt may reduce or refund FIP fees if performance improves or the franchisee accelerates compliance with hotel renovation requirements.