For The Standardx franchise, what does the Guarantor Monetary Threshold consist of?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, each owner that signs the Guaranty must agree, and you must ensure, that at least one guarantor will satisfy the Guarantor Monetary Threshold at all times during the Franchise Agreement's term.
The "Guarantor Monetary Threshold" means each of the following: (a) total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), each as calculated according to U.S. generally accepted accounting principles, in the minimum amount of the guarantor net worth minimum listed in Exhibit B-1 to the Franchise Agreement; and (b) liquid assets (consisting of cash, cash equivalents and marketable securities), that at least one guarantor (whether an individual or an entity) in the minimum amount of the guarantor liquidity minimum listed in Exhibit B-1 to the Franchise Agreement.
We will determine the amount of the Guarantor Monetary Threshold as of the Franchise Agreement's effective date based on information we deem relevant, including the Hotel's size, the market in which the Hotel will operate, and our assessment of our risk or exposure in the transaction.
We will list the initial Guarantor Monetary Threshold in Exhibit B-1 to the Franchise Agreement before we and you sign it.
The Guarantor Monetary Threshold will increase automatically each year of the Franchise Agreement's term, without notice from us, effective on the first day of the calendar month during which the Franchise Agreement's effective date falls, by an amount equal to the CPI Increase.
The "CPI Increase" means the amount to be adjusted multiplied by a fraction, the numerator of which is the Consumer Price Index for All Urban Consumers for All Items, which the U.S. Department of Labor, Bureau of Labor Statistics publishes (the "Base Index") as of the first day of the calendar month during which the increase is to take effect, and the denominator of which is the Base Index in effect on the Franchise Agreement's effective date or used for the most recent increase (whichever is later).
If the Base Index is no longer published, we may designate another reasonably comparable index for calculating changes in the cost of living or purchasing power for consumers.
Your guarantors must provide us on an annual basis financial statements or other documents that we reasonably specify, which you or the guarantor certify in the manner we specify, demonstrating that at least one guarantor satisfies the Guarantor Monetary Threshold.
You and your guarantors must reasonably cooperate with all auditing and reporting requirements relating to the Guarantor Monetary Threshold.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 71–74)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the Guarantor Monetary Threshold has specific requirements that a guarantor must meet throughout the Franchise Agreement's term. This threshold is composed of two main components. First, the guarantor's total assets less total liabilities (excluding hotel assets and liabilities solely related to the hotel) must be no less than the guarantor net worth minimum outlined in Exhibit B-1 of the Franchise Agreement, calculated using U.S. generally accepted accounting principles. Second, the guarantor must possess liquid assets (cash, cash equivalents, and marketable securities) that meet or exceed the guarantor liquidity minimum also specified in Exhibit B-1. At least one guarantor must satisfy both of these minimums.
The Standardx determines the initial Guarantor Monetary Threshold on the Franchise Agreement's effective date, considering factors such as the hotel's size, the market it operates in, and the franchisor's assessment of risk. This initial threshold will be detailed in Exhibit B-1 before the agreement is signed by both parties.
Furthermore, the Guarantor Monetary Threshold is not static; it increases annually without notice from The Standardx. This increase takes effect on the first day of the calendar month that coincides with the Franchise Agreement's effective date. The increase is calculated based on the CPI Increase, which uses the Consumer Price Index for All Urban Consumers for All Items published by the U.S. Department of Labor, Bureau of Labor Statistics. If the Base Index is discontinued, The Standardx may designate a reasonably comparable index. The Standardx also requires annual financial statements or other documents to verify that at least one guarantor continues to meet the Guarantor Monetary Threshold, and franchisees and guarantors must cooperate with auditing and reporting requirements related to this threshold.