What is The Standardx franchisee's obligation regarding indemnification of Hyatt Indemnified Parties for losses arising from the application submitted to Hyatt?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Indemnification. In addition to Franchisee's obligation under this Agreement to procure and maintain insurance, Franchisee agrees to indemnify and hold harmless the Hyatt Indemnified Parties against, and to reimburse any one or more of the Hyatt Indemnified Parties for, all Losses directly or indirectly arising out of, resulting from, or in connection with (i) the application Franchisee submitted to Hyatt for the rights granted under this Agreement; (ii) the development or operation of the Hotel, including the use of any Market Descriptor or Hotel IP in connection with the Hotel and any claim or allegation relating to the Accessibility Laws, and including claims alleging either intentional or negligent conduct, acts or omissions by Hyatt or its Affiliates (or any of their agents, employees or representatives) relating to the operation of the Hotel, the F&B Operations, the Spa Operations (if any) or the Hotel System, subject to Section 8.4(a); or (iii) Franchisee's breach of this Agreement.
(b) Defense. Franchisee shall notify Hyatt within five (5) days after receiving notice of any Proceeding covered in Section 8.3(a) naming any Hyatt Indemnified Party as a defendant or potential defendant and shall include with such notification copies of all correspondence or court papers relating to the Proceeding. Franchisee agrees to defend (at Franchisee's expense) the Hyatt Indemnified Parties from and against any and all Proceedings directly or indirectly arising out of, resulting from, or in connection with any matter described in Section 8.3(a)(i) through (iii), including those alleging a Hyatt Indemnified Party's negligence or willful misconduct, subject to Section 8.4(a). Each Hyatt Indemnified Party may at Franchisee's expense defend and control the defense of any Proceeding described in this Section 8.3(b) and agree to settlements and take any other remedial, corrective, or other actions, without limiting Franchisee's obligations under Section 8.3(a), provided that the Hyatt Indemnified Party will seek Franchisee's advice and counsel, and keep Franchisee informed, with regard to any proposed or contemplated settlement.
(c) Separate Counsel and Settlement. If separate counsel is appropriate in Hyatt's opinion because of actual or potential conflicts of interest, Hyatt may retain attorneys and/or independently defend any Proceeding subject to indemnification under this Section 8.3 at Franchisee's sole expense. No party may agree to any settlement in any Proceeding that could have an adverse effect on Hyatt, its Affiliates, the Hotel System, or other franchisees without Hyatt's prior approval.
(d) Right to Control Defense of Certain Proceedings. Without limiting Hyatt's rights or Franchisee's obligations under this Section 8.3, Hyatt (or its designee) has the right to defend and control the defense of any Proceeding arising from any Data Breach or any class action or other Proceeding involving both the Hotel and any other Brand Hotel or Hyatt Network Hotel, regardless of whether Hyatt or any of the other Hyatt Indemnified Parties are named defendants in that Proceeding. Franchisee shall promptly reimburse Hyatt for the Hotel's proportionate share of all reasonable expenses that Hyatt incurs in connection with any Proceeding covered by this Section 8.3(d). Hyatt shall allocate those expenses equitably among the Hotel and all other Brand Hotels and Hyatt Network Hotels involved in the Proceeding in any manner that Hyatt reasonably determines.
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, franchisees have specific obligations regarding the indemnification of Hyatt Indemnified Parties. The franchisee must indemnify and hold harmless the Hyatt Indemnified Parties, and reimburse them for all losses that directly or indirectly arise from the application the franchisee submitted to Hyatt for the rights granted under the Franchise Agreement. This means that if Hyatt incurs costs or liabilities due to issues with the franchisee's application, the franchisee is responsible for covering those losses. This indemnification obligation is in addition to the franchisee's duty to procure and maintain insurance. The franchisee is also responsible for defending Hyatt Indemnified Parties against any related proceedings.
Specifically, the franchisee must notify Hyatt within five days of receiving notice of any proceeding covered in Section 8.3(a) that names any Hyatt Indemnified Party as a defendant or potential defendant. This notification must include copies of all correspondence or court papers related to the proceeding. The franchisee is obligated to defend Hyatt Indemnified Parties (at the franchisee's expense) against any and all proceedings arising from matters described in Section 8.3(a)(i) through (iii), even if those proceedings allege negligence or willful misconduct by a Hyatt Indemnified Party, subject to Section 8.4(a).
Furthermore, each Hyatt Indemnified Party has the right to defend and control the defense of any proceeding described in Section 8.3(b) at the franchisee's expense. They can also agree to settlements and take other remedial actions without limiting the franchisee's obligations under Section 8.3(a). However, the Hyatt Indemnified Party must seek the franchisee's advice and keep them informed about any proposed settlement. If Hyatt believes there is an actual or potential conflict of interest, they may retain attorneys and independently defend any proceeding at the franchisee's sole expense. No party can agree to a settlement that could adversely affect Hyatt, its affiliates, the Hotel System, or other franchisees without Hyatt's prior approval.
Hyatt also retains the right to defend and control the defense of any proceeding arising from a data breach or any class action involving both the Hotel and any other Brand Hotel or Hyatt Network Hotel, regardless of whether Hyatt or any of the other Hyatt Indemnified Parties are named defendants. The franchisee is required to promptly reimburse Hyatt for the Hotel's proportionate share of all reasonable expenses incurred by Hyatt in connection with such proceedings. These expenses will be allocated equitably among the Hotel and all other Brand Hotels and Hyatt Network Hotels involved in the proceeding, as reasonably determined by Hyatt. The obligations under Sections 8.3 and 8.4 remain in effect even after the agreement expires or terminates, and neither party is required to seek recovery from insurers or mitigate losses before claiming under these sections.