What performance obligations does The Standardx satisfy over time?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
We satisfy the following performance obligations over time: access to Hyatt's symbolic IP, services provided under management and hotel services agreements, administration of the loyalty program, and the license of our brand name through our co-branded credit card agreements. Each of these performance obligations is considered a sales-based royalty or a series of distinct services, and although the activities to fulfill each of these promises may vary from day to day, the nature of each promise is the same and the customer benefits from the services every day.
For each performance obligation satisfied over time, we recognize revenues using an output method based on the value transferred to the customer. Revenues are recognized based on the transaction price and the observable outputs related to each performance obligation. We deem the following to represent our progress in satisfying these performance obligations:
- revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP as it is indicative of the value third-party owners and franchisees derive;
- revenues and operating profits of the hotels for the promise to provide services to the hotels under management and hotel services agreements;
- award night redemptions or point redemptions with third-party partners for the administration of the loyalty program performance obligation; and
- cardholder spend for the license to the Hyatt name through our co-branded credit card programs as it is indicative of the value our partner derives from the use of our name.
Within our management and hotel services agreements, we have two performance obligations: providing access to Hyatt's IP and providing management and hotel services. Although these constitute two separate performance obligations, both obligations represent services that are satisfied over time, and we recognize revenues using an output method based on the performance of the hotel. Therefore, we have not allocated the transaction price between these two performance obligations as the allocation would result in the same pattern of revenue recognition.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, several performance obligations are satisfied over time. These include providing access to The Standardx's symbolic intellectual property, delivering services under management and hotel services agreements, administering the loyalty program, and licensing the brand name through co-branded credit card agreements. The FDD indicates that The Standardx considers each of these obligations as either a sales-based royalty or a series of distinct services.
For each of these performance obligations, The Standardx recognizes revenues using an output method based on the value transferred to the customer. This means that revenue recognition is tied to the observable outputs related to each obligation, reflecting the progress in satisfying these obligations. Examples of progress include revenues and operating profits earned by hotels for access to The Standardx's IP, revenues and operating profits for services provided under management and hotel services agreements, award night redemptions for loyalty program administration, and cardholder spending for the license to The Standardx name through co-branded credit card programs.
The FDD also mentions that within management and hotel services agreements, there are two performance obligations: providing access to The Standardx's IP and providing management and hotel services. Although these are separate obligations, The Standardx does not allocate the transaction price between them because both are satisfied over time, and the allocation would result in the same pattern of revenue recognition. This approach simplifies the accounting process while accurately reflecting the delivery of value to franchisees and customers.