What is the relationship between Hyatt Franchising, L.L.C.'s agreement to a franchisee's request and The Standardx franchisee providing a release and covenant not to sue?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
| HYATT FRANCHISING, L.L.C. ("we," "us," or "our") and the undersigned franchisee, |
|---|
| ("you" |
| or |
| "your"), |
| currently are parties to a certain Franchise Agreement (the "Franchise Agreement") dated |
| You have asked us to take the following action or to agree to |
| the following request: [insert as appropriate for renewal or transfer situation] |
| . We have the right under the Franchise Agreement to obtain a general release from |
| you (and, if applicable, your owners) as a condition of taking this action or agreeing to this request. |
| Therefore, we are willing to take the action or agree to the request specified above if you (and, if |
| applicable, your owners) give us the release and covenant not to sue provided below in this |
| document. You (and, if applicable, your owners) are willing to give us the release and covenant |
| not to sue provided below as partial consideration for our willingness to take the action or agree to |
| the request described above. |
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, Hyatt Franchising, L.L.C. may require a franchisee to provide a release and covenant not to sue as a condition of Hyatt taking a specific action requested by the franchisee. This condition applies when the franchisee asks Hyatt to take a certain action or agree to a specific request, such as in a renewal or transfer situation. Hyatt has the right to demand a general release from the franchisee (and their owners, if applicable) before agreeing to the franchisee's request.
In essence, Hyatt's willingness to grant the franchisee's request is contingent upon the franchisee (and their owners, if applicable) providing a release and covenant not to sue. The franchisee's agreement to this release serves as partial consideration for Hyatt's agreement to the franchisee's request. This release covers all claims, damages, and causes of action the franchisee may have against Hyatt, arising from the Franchise Agreement or the relationship between the parties.
The release and covenant not to sue, as described in the FDD, essentially protects Hyatt from potential legal action by the franchisee related to the agreement or their relationship. This is a fairly common practice in franchising when significant changes or requests are made, as it provides the franchisor with legal protection and clarity moving forward. The franchisee, in turn, receives the benefit of Hyatt's agreement to their request, making it a mutually agreed-upon exchange of consideration.
Prospective The Standardx franchisees should carefully consider the implications of providing such a release, as it could limit their future legal options against Hyatt. It is advisable to seek legal counsel to fully understand the scope and impact of the release before agreeing to it.