Under what conditions are audit expenses charged to a Caption By Hyatt franchisee?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
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)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, a franchisee may incur audit expenses if the hotel is found to be non-compliant with the Hotel System, System Standards, or any other provisions outlined in the Franchise Agreement. In such cases, the franchisee is responsible for covering the costs associated with correcting the non-compliance. These costs are part of the Hotel's allocable share of all fees and other costs associated with the Quality Assurance and Compliance Program.
Specifically, Caption By Hyatt may require the franchisee to reimburse costs related to the non-compliance. This includes expenses such as travel and living costs, guest satisfaction payments, and other administrative costs for necessary actions, follow-up inspections, audits, or re-evaluation visits until the non-compliance is fully corrected. Additionally, the franchisee may be required to pay for meetings and additional brand standards training programs for their personnel related to the non-compliance. They may also have to pay program fees used to promote guest satisfaction initiatives for Hyatt Network Hotels.
The fees associated with non-compliance can vary depending on the extent of the non-compliance and may increase if Caption By Hyatt's costs increase. For example, hotels placed in or remaining in the Franchise Improvement Program (FIP) due to low Quality Assurance (QA) scores face administrative fees for each six-month stage: $5,000 for Stage 1, $15,000 for Stage 2, and $20,000 for Stage 3. If the hotel fails to achieve passing scores by the end of Stage 3, it enters the Brand Performance Program (BPP), incurring an annual administrative fee of $45,000. However, Caption By Hyatt retains the discretion to reduce or refund FIP fees based on improved performance or accelerated compliance with hotel renovation requirements.