How often are base management and hotel services fees due and payable to The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
• Management and hotel services agreement services—Under the terms of our management and hotel services agreements, we provide management and hotel services, which form a single performance obligation that qualifies as a series. In exchange, we receive variable consideration in the form of management or hotel services fees which are comprised of base and/or incentive management fees. Incentive fees are typically subject to the achievement of certain profitability targets, and therefore, we apply judgment in determining the amount of incentive management fees recognized each period. Incentive management fees are recognized to the extent it is probable that we will not reverse a significant portion of the fees in a subsequent period. We rely on internal financial forecasts and historical trends to estimate the amount of incentive management fees recognized and the probability that incentive fees will reverse in the future. Generally, base management and hotel services fees are due and payable on a monthly basis as services are provided, and incentive fees are due and payable based on the terms of the agreement, but at a minimum, incentive fees are billed and collected annually. Revenues are recognized over time as services are rendered.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, base management and hotel services fees are generally due and payable on a monthly basis. These fees are paid as services are provided to the hotel.
The Standardx receives variable consideration in the form of management or hotel services fees, which include both base and incentive management fees. Incentive fees are tied to the achievement of certain profitability targets. The agreement specifies the terms for when incentive fees are due and payable. However, at a minimum, The Standardx bills and collects incentive fees annually.
For a prospective franchisee, this means that they can expect to make monthly payments for base management and hotel services. They should also be prepared to pay incentive fees based on the terms outlined in their specific agreement with The Standardx, with at least one payment occurring annually. Understanding the specific profitability targets and payment terms for incentive fees will be crucial for managing the hotel's finances.