What are the obligations of The Standardx regarding the enforcement of System Standards, considering the restrictions on sources of products and services in Item 8 and the potential for litigation as described in Item 3?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
IONS ON SOURCES OF PRODUCTS AND SERVICES**
You must operate the Hotel according to our System Standards, which may regulate, among other things, the types, models, and brands of products and services your Hotel uses; required and authorized products and services that the Hotel must offer to customers and quality standards for those products and services (including F&B Operations, as defined below); and designated and approved suppliers of these products and services, which may include or be limited to us and/or our affiliates that we may designate. "F&B Operations" means all food and beverage operations for Hotel guests and patrons consisting of the following (in each case, to the extent applicable): (a) restaurant, dining, bar, lounge, and retail food and beverage services; (b) banquet, meeting, event, catering (including outside catering) and room services; (c) a multi-functional
service area that serves coffee and breakfast, lunch and dinner menu items, and alcoholic beverages; (d) grab-and-go food and beverage items available for purchase in a Hotel market; (e) a communal area serving as a combination restaurant, bar, coffee shop and workplace; (f) a standalone restaurant and/or rooftop bar; and (g) all other food, beverage and related services at the Hotel.
If you are constructing a new Brand Hotel or converting an existing hotel or other building to a Brand Hotel, we or Hyatt Corporation will advise you on the System Standards to be met, the aesthetics to be reflected, and the systems to be installed at the Hotel, so the Hotel can be opened and operated as a Brand Hotel. You and we or Hyatt Corporation will determine the types and levels of services and assistance you will receive and the fees you will pay for the services. We and Hyatt Corporation are the only approved suppliers for these services if you are constructing a new Hotel. We also provide IT Project Management Services and other technology-related services.
You must use the Opera PMS at the Hotel. We will provide services necessary to install access to the PMS at the Hotel under the Franchise Agreement. You must also sign an agreement with our designated supplier to provide connectivity services and training for the PMS.
System Services
Mandatory Services and Non Mandatory Services comprise the System Services. If you are in full compliance with your obligations under the Franchise Agreement, we or one or more members of the Hyatt Group will provide you those System Services that we periodically specify. You must participate in all Mandatory Services and related programs, and may (at your option) participate in any or all Non-Mandatory Services and related programs, in the manner that we periodically specify. You must acquire all Mandatory Services (as we periodically modify them) only from a member of the Hyatt Group. We may periodically add to, delete from, and otherwise modify these System Services, and the scope of and manner of providing System Services, upon notice to you. Also, due to the differences in products, services, markets and hospitality experiences among Brand Hotels and other Hyatt Network Hotels, we may, where we deem appropriate in our judgment: (a) classify certain System Services as Mandatory Services for the Hotel which we classify as Non-Mandatory Services or do not offer to other Brand Hotels and/or other Hyatt Network Hotels; (b) not provide to the Hotel certain System Services that we provide to other Brand Hotels and/or other Hyatt Network Hotels; and (c) limit the scope of those System Services provided to franchised Brand Hotels, such as by limiting the access that franchised Brand Hotels have to certain customer and other proprietary information for Hyatt Network Hotels other than the Hotel. We describe the current System Services and the current charges for those System Services in Item 6, including all of the services offered pursuant to the Central Services Agreement, which are generally Non-Mandatory Services but in certain circumstances may be designated as Mandatory Services as a condition of our approval of the Hotel's management company, as consideration for other items negotiated as part of the Franchise Agreement, or as part of the requirements of the Quality Assurance and Compliance Program.
Avendra, LLC ("Avendra") is a products and services sourcing company that offers volume contracts to its customer hotels on a variety of FF&E and other items used in hotel operations, including food and beverage equipment and supplies (such as branded and commodity programs),
operating equipment and supplies (such as linens, pillows, terry, and light bulbs), and other products and services (such as printing and stationery, logoed items, chemicals, and pest elimination), at competitive prices that Avendra negotiates. You determine whether, and the extent to which, your Hotel will use Avendra's services. However, if you choose not to use Avendra, you might find it impracticable to purchase certain products for the Hotel (such as bathroom amenities made specifically for Hyatt Network Hotels) elsewhere.
You may, and if we require (depending on your or your approved management company's experience) you must, acquire revenue management services from us. You also may, but are not required to, use Rosemont's purchasing and project management services and acquire our pre-opening advisory assistance for your Hotel. If you are constructing a new Brand Hotel, you may decide to engage us (or our affiliate) to provide technical services and assistance relating to the Hotel's development. We or another member of the Hyatt Group, Avendra and Rosemont negotiate purchase arrangements with suppliers, including price terms, for some required Hotel items. When we do so, we seek to promote the overall interests of the network of Brand Hotels and other Hyatt Network Hotels and our interests as the franchisor. We do not provide material benefits (like renewal or granting additional franchises) to individual franchisees for purchasing particular products or services or for using particular suppliers.
You must participate in, connect with, and use the authorized CRS, GDS and ADS as we periodically designate for offering, booking, modifying, and communicating guest room reservations for the Hotel and bear all related costs and expenses. You may only use the GDS and ADS that we periodically authorize. You must honor and give first priority on available rooms to all confirmed reservations that the CRS, GDS or ADS refer to the Hotel.
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, franchisees must operate their hotels according to The Standardx's System Standards. These standards dictate various aspects of the hotel's operations, including the types, models, and brands of products and services used, the required and authorized products and services offered to customers, quality standards for those products and services (including food and beverage operations), and designated and approved suppliers. The Standardx can modify these System Standards periodically and requires franchisees to adhere to them. Franchisees are obligated to buy or lease most products and services according to these System Standards, which The Standardx issues and modifies based on experience from its own and its franchisees' operations. These standards may include minimum requirements for delivery, performance, reputation, prices, quality, design, and appearance. Franchisees must also ensure strict compliance with all applicable laws and maintain adequate insurance coverage.
If a franchisee wishes to use a supplier not already approved, they must submit a written request to The Standardx with all necessary information and samples for evaluation. The Standardx may charge the franchisee for the costs of this review. Approval may be conditional on various factors, including quality, quantity, warranties, prices, and the supplier's ability to comply with The Standardx's vendor compliance guide. The Standardx retains the right to revoke approval if a supplier fails to continue meeting System Standards and may designate particular sources or brands that it deems critical to the hotel system. Franchisees are also required to participate in and use The Standardx's designated central reservation system (CRS), global distribution system (GDS), and alternative distribution system (ADS) for reservations, bearing all related costs. They must prioritize reservations made through these systems and comply with The Standardx's "best rate guarantee" policies.
The Standardx also mandates participation in various programs, including marketing, reservation services, rate and room inventory management, advertising, guest frequency and loyalty, and training programs. Franchisees must comply with the terms of these programs and any related agreements. Furthermore, franchisees cannot make material changes to the hotel's construction or operations without prior written consent from The Standardx, including changes to structural or life safety equipment, the number or type of guest rooms, or architectural features. The Standardx may periodically require franchisees to upgrade or renovate the hotel to comply with current standards, potentially requiring additional capital investment. These comprehensive System Standards ensure consistency and quality across all The Standardx hotels, but also place significant restrictions on franchisees' autonomy in sourcing and operating their businesses.