What do the revenues for reimbursed costs represent for The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- Revenues for reimbursed costs—Revenues for reimbursed costs represent the reimbursement of costs incurred on behalf of third-party owners and franchisees.
These reimbursed costs relate primarily to payroll at managed properties where we are the employer, as well as costs associated with system-wide services and the loyalty program operated on behalf of owners.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, revenues for reimbursed costs are reimbursements for expenses the company incurs on behalf of its third-party owners and franchisees. These costs primarily cover payroll for managed properties where The Standardx acts as the employer. They also include expenses related to system-wide services and the loyalty program that The Standardx operates for the benefit of its owners.
For a prospective franchisee, this means that certain costs incurred by The Standardx in managing properties or providing system-wide services are passed on to the franchisees. This is a common practice in franchising, where the franchisor provides support and services in exchange for fees or reimbursements. The FDD specifies that these system-wide services are accounted for under a fund model where franchisees are invoiced a system-wide assessment fee monthly. The Standardx recognizes these revenues over time as services are provided.
The Standardx intends to manage these system-wide programs to break-even, meaning they do not aim to profit from these services. However, the timing of revenue received from owners and the expenses incurred to operate the programs may not always align, which could impact The Standardx's net income. Additionally, under certain management agreements, primarily in the U.S., The Standardx is the employer of hotel employees and is reimbursed for these employee management service costs without any added margin.
Advertising costs are also generally reimbursed by The Standardx's third-party owners and franchisees and are recognized as revenues for reimbursed costs. The loyalty program is funded through contributions from participating properties and third-party loyalty alliances based on eligible revenues from loyalty program members and returns on marketable securities. The funds are used for the redemption of member awards and payment of operating expenses, which are expensed as incurred and recognized in reimbursed costs on The Standardx's consolidated statements of income.