How often are the sales-based fees payable to The Standardx from hotel owners for access to IP?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- Access to Hyatt's IP, including the Hyatt brand names—We receive sales-based fees from hotel owners in exchange for providing access to our IP, including the Hyatt brand names and systems, among other services. Fees are generally payable on a monthly basis as third-party owners and franchisees derive value from access to our IP. Fees are recognized over time as services are rendered. Under our franchise agreements, we also receive initial fees from third-party owners and franchisees. The initial fees do not represent a distinct performance obligation, and therefore, are combined with the royalty fees and deferred and recognized in franchise and other fees over the expected customer life, which is typically the initial term of the franchise agreement.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, hotel owners generally pay sales-based fees monthly for access to The Standardx's intellectual property. These fees compensate The Standardx for providing access to its brand names and systems. The fees are paid as the hotel owners derive value from using The Standardx's IP.
This monthly payment structure is typical in the franchise industry, as it aligns the franchisor's revenue with the franchisee's ongoing sales. It ensures a consistent revenue stream for The Standardx while allowing franchisees to pay fees based on their actual earnings.
In addition to these monthly sales-based fees, The Standardx also collects initial franchise fees from new franchisees. However, these initial fees are not treated as distinct performance obligations. Instead, The Standardx combines them with the ongoing royalty fees and recognizes them over the expected customer life, which is usually the initial term of the franchise agreement. This accounting approach spreads the recognition of initial fees over the long term, aligning it with the period during which the franchisee benefits from The Standardx's brand and systems.