For The Standardx franchise, is the 'Average Monthly Revenue' calculation impacted by a suspension of operations not consented to by Hyatt?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if "Average Monthly Revenues" as determined pursuant to any part of (a) through (c) above has been materially and negatively impacted during the preceding twelve (12) full calendar month period by a disruption in Hotel operations resulting from Force Majeure, casualty, suspension of operations (whether or not consented to by Hyatt), renovation of the Hotel, or any other similar circumstances, "Average Monthly Revenue" shall be determined by reference to the most recent twelve (12) full calendar month period preceding termination during which the Hotel performance was not so impacted.
| Section | Subject | Applicable Term | |
|---|---|---|---|
| 16.5 | Liquidated Damages | (a) the lesser of thirty-six (36) or the number of months then remaining in this Agreement’s term had it not been terminated, multiplied by (b) the sum of (i) the Average Monthly Revenue times five percent (5%) for lost future Royalty Fees, plus (ii) the Average Monthly Revenue times three and one-half percent (3.5%) for lost future System Services Charges |
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, the calculation of 'Average Monthly Revenues' can be affected by a suspension of hotel operations, regardless of whether Hyatt consented to the suspension. Specifically, if the 'Average Monthly Revenues' have been materially and negatively impacted during the preceding twelve full calendar month period by a disruption in Hotel operations resulting from Force Majeure, casualty, suspension of operations (whether or not consented to by Hyatt), renovation of the Hotel, or any other similar circumstances, 'Average Monthly Revenue' shall be determined by reference to the most recent twelve full calendar month period preceding termination during which the Hotel performance was not so impacted.
This provision protects both The Standardx as the franchisor and the franchisee in situations where typical revenue figures are skewed due to unforeseen circumstances. By allowing the use of a more representative historical period, the calculation of important financial metrics like Royalty Fees and System Services Charges, and liquidated damages remains fair and accurate, even if the hotel experiences temporary disruptions.
For a prospective The Standardx franchisee, this clause offers a degree of financial security. If a situation arises that temporarily impacts hotel operations and revenues, the franchisee can ensure that their financial obligations and any potential termination settlements are based on a more accurate reflection of the hotel's earning potential. This is particularly important when calculating liquidated damages, which, as shown in the table, are based on Average Monthly Revenue. The liquidated damages are calculated as the lesser of thirty-six months or the number of months remaining in the agreement's term, multiplied by the sum of 5% of the Average Monthly Revenue for lost future Royalty Fees and 3.5% of the Average Monthly Revenue for lost future System Services Charges.