Does the Guaranty and Assumption of Obligations for The Standardx cover Franchisee's performance of arbitration requirements?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
(ii) Franchisee's performance of each and every provision in the Franchise Agreement (including any amendments or modifications of the Franchise Agreement), including, without limitation: (a) obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including, without limitation, the confidentiality and transfer requirements and the prohibitions with respect to Competing Brand Owners; and (b) the arbitration requirements and other enforcement provisions in ARTICLE XIV and ARTICLE XVIII of the Franchise Agreement.
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- Guarantor Monetary Threshold. Guarantor represents and agrees that, at the time of signing this Guaranty and at all times during the term of the Franchise Agreement, at least one of the undersigned or another then current guarantor of Franchisee's obligations under the Franchise Agreement satisfies the Guarantor Monetary Threshold (defined below). The "Guarantor Monetary Threshold" means each of the following: (a) the amount of total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), each as calculated in accordance with U.S. generally accepted accounting principles, equal to or exceeding ______________________ Dollars ($________) as of the date hereof; and (b) liquid assets (consisting of cash, cash equivalents and marketable securities) equal to or exceeding ______________________ Dollars ($________) as of the date hereof. Each dollar amount in this Section 4 shall increase automatically each year, without notice from Hyatt, 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, as published by the U.S. Department of Labor, Bureau of Labor Statistics (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).
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 Guaranty and Assumption of Obligations does cover the Franchisee's performance of arbitration requirements. The guarantor agrees to guarantee the franchisee's performance of every provision in the Franchise Agreement. This includes, without limitation, the arbitration requirements in Article XIV and Article XVIII of the Franchise Agreement.
This means that if the franchisee fails to meet the arbitration requirements outlined in the franchise agreement, the guarantor is responsible for ensuring those obligations are fulfilled. The guarantor is essentially vouching for the franchisee's adherence to all aspects of the agreement, including dispute resolution processes like arbitration.
For a prospective The Standardx franchisee, this highlights the importance of understanding the arbitration requirements within the Franchise Agreement, as well as the financial threshold that the guarantor must meet. The guarantor must have a certain amount of total assets less total liabilities and liquid assets. The dollar amounts in this section increase automatically each year.