How is the PIP fee applied towards the additional Application Fee for The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) The initial Application Fee was fully earned by Hyatt and non-refundable upon Hyatt's approval of Franchisee's franchise application before Hyatt and Franchisee signed this Agreement. If Hyatt and Franchisee agree to add guest rooms to the Hotel above the number of rooms stated in Exhibit B-3 before the Hotel opens, then Franchisee must pay Hyatt, when Hyatt approves the additional guest rooms, an additional Application Fee in an amount equal to the amount set forth in Exhibit B-1. After the Hotel opens, if Franchisee wants to add any guest rooms to the Hotel, Franchisee must pay Hyatt's then current PIP fee (currently the amount set forth in Exhibit B-1 when Franchisee requests Hyatt's approval of Franchisee's plans. This PIP fee is non-refundable. Hyatt will apply this PIP fee toward the additional Application Fee of the amount set forth in Exhibit B-1 if Hyatt approves Franchisee's plans. If the PIP fee exceeds the additional Application Fee, Hyatt may keep the excess. The remaining portion of the additional Application Fee is due, fully earned by Hyatt, and non-refundable on the date Hyatt approves Franchisee's plans to develop the additional guest rooms.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the PIP (Property Improvement Plan) fee is applied towards the additional Application Fee under specific conditions related to adding guest rooms. If a franchisee wants to add guest rooms to the hotel after it opens, they must first request approval from Hyatt and pay Hyatt's then-current PIP fee, which is currently $10,000. This PIP fee is non-refundable. If Hyatt approves the franchisee's plans, the PIP fee is then applied toward the additional Application Fee. The additional application fee is calculated as $500 multiplied by the number of additional guest rooms above 200 total guest rooms.
If the PIP fee ($10,000) exceeds the additional Application Fee, The Standardx may keep the excess amount. The remaining portion of the additional Application Fee is due, fully earned, and non-refundable on the date The Standardx approves the franchisee's plans to develop the additional guest rooms.
For a prospective The Standardx franchisee, this means that if you plan to expand your hotel by adding more rooms after the initial opening, you will need to budget for both the PIP fee and potentially an additional Application Fee. The PIP fee acts as a credit towards the additional Application Fee, but it's crucial to understand that the PIP fee is non-refundable, regardless of whether the full amount is used to offset the additional Application Fee. This policy incentivizes careful planning and assessment before requesting approval for additional guest rooms.