Regarding financial obligations under the agreement, on whom is The Standardx franchisee relying?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, simultaneously herewith, Franchisee is entering into a Brand Hotel Franchise Agreement (as amended, modified or amended and restated from time to time, the "Franchise Agreement") with Hyatt with respect to the Hotel;
WHEREAS, Guarantor is either an owner (whether direct or indirect) of Franchisee or otherwise has a direct or indirect relationship with Franchisee or its affiliates, Guarantor will benefit significantly from Hyatt's entering into the Franchise Agreement with Franchisee, and Hyatt will not enter into the Franchise Agreement unless each of the undersigned agrees to sign and comply with the terms of this Guaranty;
WHEREAS, as a condition to entering into the Franchise Agreement, Hyatt has required that Guarantor guarantee the payment and performance of the Guaranteed Obligations (as defined herein), subject to the terms of this Guaranty.
NOW, THEREFORE, as a material inducement to Hyatt entering into the Franchise Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby does irrevocably and unconditionally warrant and represent unto and covenant as follows:
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- Recitals; Defined Terms. The recitals above are a part of this Guaranty, form a basis for this Guaranty, and shall be considered prima facie evidence of the facts and documents referred to therein. Defined terms used but not defined herein shall have the meanings ascribed to them in the Franchise Agreement.
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- Guaranty. Guarantor hereby irrevocably and unconditionally personally guarantees to Hyatt and its successors and assigns Franchisee's punctual payment and performance of, and agrees to be personally bound by and personally liable for the breach of, each and every Guaranteed Obligation. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.
- H-1 3. Guaranteed Obligations. As used herein, the term "Guaranteed Obligations" means (i) Franchisee's payment in full of all of Franchisee's monetary obligations including but
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 franchisee is primarily responsible for their own financial obligations. However, there are some nuances regarding guarantees and potential third-party involvement. Specifically, a Guarantor may be required to guarantee the franchisee's payment and performance of obligations to Hyatt, as stated in the Franchise Agreement. This Guarantor can be an owner or someone with a relationship to the franchisee.
Furthermore, the Management Company operating the Hotel acknowledges the terms of the Franchise Agreement and agrees to be bound by them, but this does not extend to assuming the franchisee's financial obligations. The Management Company is not responsible for paying Royalty Fees, System Services Charges, or any liquidated damages that the franchisee owes. This clarifies that while the Management Company plays a role in the hotel's operation, the franchisee remains ultimately accountable for financial commitments.
In addition to the franchisee and potential guarantors, Hyatt may make arrangements with its Affiliates or other third parties to provide various services related to the Hotel System. However, these arrangements do not shift the franchisee's primary financial responsibilities. The franchisee is still obligated to pay Hyatt's fees and reimburse expenses for any assistance provided. Therefore, while other entities may offer support or services, the financial burden primarily rests on the franchisee, potentially backed by a Guarantor.