Is a The Standardx franchisee allowed to rely on Hyatt's affiliates regarding Hyatt's financial obligations under the agreement?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
(d) Franchisee represents, warrants and acknowledges that it is relying solely on Hyatt, and not on any Affiliate of Hyatt, with regard to Hyatt's financial and other obligations under this Agreement, and no employee or other person speaking on behalf of, or otherwise representing, Hyatt has made any statement or promise to the effect that Hyatt's Affiliates guarantee Hyatt's performance or financially back Hyatt.
19.3 No Waiver or Disclaimer of Reliance in Certain States.
The following provision applies only to franchisees and franchises that are subject to state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:
No statement, questionnaire, or acknowledgement signed or agreed to by Franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by Hyatt, any franchise seller, or any other person acting on behalf of Hyatt. This provision supersedes any other term of any document executed in connection with the franchise.
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, a franchisee acknowledges that they are relying solely on Hyatt, and not on any of Hyatt's affiliates, regarding Hyatt's financial and other obligations under the franchise agreement. This means that The Standardx franchisee cannot depend on any financial guarantees or backing from Hyatt's affiliates. Furthermore, the franchisee acknowledges that no employee or person representing Hyatt has made any statement or promise suggesting that Hyatt's affiliates would guarantee Hyatt's performance or provide financial backing.
This acknowledgement is significant because it clarifies that Hyatt's financial obligations are solely Hyatt's responsibility, and its affiliates bear no responsibility for them. This protects Hyatt from potential claims that its affiliates should be held liable for Hyatt's obligations.
However, there is an exception to this rule for franchisees and franchises subject to state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin. In these states, no statement, questionnaire, or acknowledgement signed by the franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by Hyatt, any franchise seller, or any other person acting on behalf of Hyatt. This provision supersedes any other term of any document executed in connection with the franchise.