In the event of condemnation of The Standardx Hotel, what is the franchisee's immediate required action?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.1 Condemnation.
Franchisee must immediately notify Hyatt of any proposed taking all or a substantial portion of the Hotel by eminent domain, condemnation or expropriation.
If the parties do not otherwise agree to relocate the Hotel, then either party may terminate this Agreement immediately upon written notice to the other.
If Franchisee and its Owners sign a Termination Agreement, then Franchisee shall not be required to pay liquidated damages pursuant to Section 16.5 at the time of termination.
However, such Termination Agreement shall provide that if Franchisee or any of its Affiliates begins construction on or operation of a hotel of the same Hotel Type at any location within the Area of Protection at any time during the twenty-four (24) month period following the effective date of termination of this Agreement, other than a Hyatt Network Hotel or a hotel that was already under contract to be developed at that particular location within the Area of Protection on the date that the Termination Agreement is signed, then Franchisee or its Owners must pay Hyatt liquidated damages equal to the amount set forth in Exhibit B-1 multiplied by the number of guest rooms in that new hotel of the same Hotel Type.
If Franchisee and its Owners fail to sign such Termination Agreement within a reasonable time after Hyatt delivers it to Franchisee, then Franchisee must pay Hyatt liquidated damages pursuant to Section 16.5 at the time of termination, in addition to complying with its other post-termination obligations under this Agreement.
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, in the event that all or a substantial portion of The Standardx Hotel is taken by eminent domain, condemnation, or expropriation, the franchisee must immediately notify Hyatt. This requirement ensures that Hyatt is promptly informed of any potential loss of the hotel property, allowing them to assess the situation and determine the next steps.
Following notification, The Standardx and Hyatt may agree to relocate the hotel. However, if they cannot reach an agreement, either party has the right to terminate the franchise agreement immediately by providing written notice to the other party. If the franchisee and its owners sign a termination agreement, the franchisee will not be required to pay liquidated damages at the time of termination.
However, the termination agreement includes a clause that protects Hyatt's interests. If the franchisee or its affiliates begin construction or operation of a hotel of the same type within the Area of Protection within 24 months of the termination date (excluding a Hyatt Network Hotel or a hotel already under contract), the franchisee must pay Hyatt liquidated damages. The amount is calculated based on Exhibit B-1 multiplied by the number of guest rooms in the new hotel. If the franchisee and its owners fail to sign the termination agreement within a reasonable time after Hyatt delivers it, the franchisee must pay liquidated damages and comply with all other post-termination obligations outlined in the agreement.