Does Hyatt have the right to notify a The Standardx franchisee's lender if the franchisee is in default?

According to The Standardx's 2025 Franchise Disclosure Document, Hyatt has the right to notify a franchisee's lender if the franchisee defaults under the franchise agreement. Specifically, Hyatt has the authority, but not the obligation, to inform the franchisee's lender, owners, creditors, and/or suppliers if the franchisee is in default or if Hyatt has terminated the agreement. This provision grants Hyatt broad discretion in managing its relationships with stakeholders connected to The Standardx franchise.

This clause is significant for prospective franchisees as it highlights the potential for Hyatt to communicate directly with their lenders and other financial partners regarding the franchisee's compliance with the franchise agreement. This communication could impact the franchisee's relationship with their lender, particularly if the franchisee is struggling to meet their obligations. It is a standard practice in franchising to have such clauses to protect the brand and ensure all parties are informed of potential risks.

For a prospective franchisee, this means that any default, even if it seems minor, could be communicated to their lender, potentially affecting their credit and financial standing. Franchisees should maintain open communication with Hyatt and their lenders to mitigate any potential negative impacts. Understanding this right is crucial for franchisees to manage their business and financial relationships effectively.

It is important for potential franchisees to consider this clause in the context of their overall financial strategy and risk management. While Hyatt is not obligated to notify the lender, the possibility exists, and franchisees should be prepared for that eventuality. This underscores the importance of maintaining compliance with the franchise agreement and proactively addressing any potential defaults.