What conditions apply if Hyatt exercises its right of first offer for The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee (or any of its Owners) at any time during the Term determine to sell or transfer for consideration this Agreement, the Hotel or all or substantially all of its assets, or a Controlling Ownership Interest in Franchisee or its Controlling Owner (except to or among Franchisee's Owners as of the Effective Date, which is not subject to this Exhibit C), then Franchisee must first give Hyatt the opportunity to acquire those rights (the "Offered Rights") by delivering written notice to Hyatt. Franchisee's notice must contain a summary of the material terms and conditions of the proposed sale or transfer, including (without limitation) the proposed consideration and the terms of any financing Franchisee or its Affiliate will provide for the proposed purchase price (the "Offer Terms"). The Offer Terms must relate exclusively to the Offered Rights and not to any other assets or rights.
Hyatt will then have thirty (30) days after receiving the Offer Terms to notify Franchisee whether Hyatt elects to acquire the Offered Rights on the Offer Terms, provided that (1) Hyatt may substitute cash, a cash equivalent, or marketable securities for any form of payment proposed in the Offer Terms (such as ownership interests in an entity) and may elect to pay the net present value of any payments to be made over time; (2) Hyatt must be afforded the opportunity to conduct customary due diligence on the Offered Rights; and (3) Hyatt must receive, and Franchisee and its Owners agree to make, all customary representations, warranties, and indemnities in Hyatt's purchase, including representations and warranties as to ownership and condition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; liabilities affecting the assets, contingent or otherwise; and indemnities for all actions, events, and conditions that existed or occurred in connection with the Hotel or Franchisee's business before the closing.
If Hyatt exercises the right of first offer, the closing will take place at a location and on a date that Hyatt chooses, within ninety (90) days after Hyatt delivers its notice of exercise to Franchisee or such longer period as may be contemplated by the Offer Terms. Hyatt and Franchisee will sign documents, including deeds, affidavits, transfers and assignments, and any other documents necessary or appropriate for the sale or transfer of the Offered Rights. Franchisee must satisfy all liens, mortgages, and/or encumbrances on the Hotel. Hyatt and Franchisee will share equally any closing costs.
If Hyatt notifies Franchisee in writing that Hyatt does not intend to exercise its right of first offer with respect to any Offer Terms, or fails to notify Franchisee of Hyatt's decision within the thirty (30)-day period described above, then Franchisee thereafter may offer the Offered Rights to
any third party on terms no more favorable to that party than the Offer Terms. However, Franchisee or its Owners may sell or transfer the Offered Rights only if Hyatt otherwise approves the transfer in accordance with, and Franchisee (and its Owners) and the transferee comply with the conditions in, ARTICLE XII of this Agreement. This means that, even if Hyatt does not exercise Hyatt's right of first offer, if the proposed transfer otherwise would not be allowed under ARTICLE XII, Franchisee (or its Owners) may not move forward with the transfer at all.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, if a franchisee (or any of its owners) decides to sell or transfer the franchise agreement, the hotel, or a controlling interest in the franchise, they must first offer Hyatt the opportunity to acquire these rights. This is done by providing written notice to Hyatt, including a summary of the material terms and conditions of the proposed sale or transfer, such as the proposed consideration and financing terms. These offer terms must relate exclusively to the rights being offered and not to any other assets or rights.
Hyatt then has 30 days to notify the franchisee whether it elects to acquire the offered rights on the specified terms. Hyatt has the option to substitute cash, a cash equivalent, or marketable securities for any form of payment proposed in the offer terms and may elect to pay the net present value of payments to be made over time. Hyatt must also be given the opportunity to conduct customary due diligence on the offered rights. The franchisee and its owners must provide all customary representations, warranties, and indemnities in Hyatt's purchase, including those related to ownership, condition, title to assets, liens, encumbrances, validity of contracts, liabilities, and indemnities for actions or events that occurred before the closing.
If Hyatt exercises its right of first offer, the closing will occur at a location and on a date Hyatt chooses, within 90 days after Hyatt delivers its notice of exercise to the franchisee, or as otherwise agreed in the offer terms. Both Hyatt and the franchisee will sign necessary documents for the sale or transfer of the offered rights. The franchisee is responsible for satisfying all liens, mortgages, and encumbrances on the hotel. Hyatt and the franchisee will share any closing costs equally. If Hyatt declines to exercise its right of first offer or fails to respond within the 30-day period, the franchisee may offer the rights to a third party, but only on terms no more favorable than those initially offered to Hyatt and subject to Hyatt's approval of the transfer under Article XII of the agreement.