After The Standardx hotel opens, what fee applies when adding guest rooms?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) The initial Application Fee was fully earned by Hyatt and non-refundable upon Hyatt's approval of Franchisee's franchise application before Hyatt and Franchisee signed this Agreement. If Hyatt and Franchisee agree to add guest rooms to the Hotel above the number of rooms stated in Exhibit B-3 before the Hotel opens, then Franchisee must pay Hyatt, when Hyatt approves the additional guest rooms, an additional Application Fee in an amount equal to the amount set forth in Exhibit B-1. After the Hotel opens, if Franchisee wants to add any guest rooms to the Hotel, Franchisee must pay Hyatt's then current PIP fee (currently the amount set forth in Exhibit B-1 when Franchisee requests Hyatt's approval of Franchisee's plans. This PIP fee is non-refundable. Hyatt will apply this PIP fee toward the additional Application Fee of the amount set forth in Exhibit B-1 if Hyatt approves Franchisee's plans. If the PIP fee exceeds the additional Application Fee, Hyatt may keep the excess. The remaining portion of the additional Application Fee is due, fully earned by Hyatt, and non-refundable on the date Hyatt approves Franchisee's plans to develop the additional guest rooms.
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, if a franchisee wants to add guest rooms to the hotel after it opens, they must pay The Standardx's then-current PIP (Property Improvement Plan) fee. The PIP fee is currently the amount set forth in Exhibit B-1 when the franchisee requests approval of their plans. This PIP fee is non-refundable.
The Standardx will apply this PIP fee toward an additional Application Fee, with the amount also set forth in Exhibit B-1, if The Standardx approves the franchisee's plans. If the PIP fee exceeds the additional Application Fee, The Standardx may keep the excess. The remaining portion of the additional Application Fee is due, fully earned by The Standardx, and non-refundable on the date The Standardx approves the franchisee's plans to develop the additional guest rooms.
This means that franchisees need to budget for these potential fees if they foresee expanding their hotel's capacity in the future. The fact that the PIP fee is non-refundable introduces a financial risk, as the franchisee will not get this money back even if the expansion plans are ultimately not approved. The additional Application Fee also needs to be considered, and franchisees should carefully review Exhibit B-1 to understand the current amounts of these fees and how they might change over time.