How are incentive management fees generally computed for The Standardx?

According to The Standardx's 2025 Franchise Disclosure Document, incentive management fees are generally computed based on a hotel profitability measure. These fees, along with base management fees and franchise fees, are categorized as gross fees. The incentive fees are part of the compensation The Standardx receives in exchange for providing hotel access to its intellectual property.

Incentive management fees are variable and typically depend on the achievement of certain profitability targets. The Standardx uses internal financial forecasts and historical trends to estimate the amount of incentive management fees and the probability that these fees might be reversed in the future. These fees are recognized to the extent that it is probable that a significant portion of the fees will not be reversed in a subsequent period.

Base management fees are usually calculated as a percentage of gross revenues and are due monthly as services are provided. Incentive fees, on the other hand, are due and payable based on the terms of the agreement, but are billed and collected at least annually. Understanding the specific profitability measures and targets used to calculate incentive fees is crucial for prospective franchisees to assess their potential earnings and financial obligations under the franchise agreement.